“New orders for durable goods—products such as computers and trucks designed to last at least three years—decreased a seasonally adjusted 1.8% in May from a month earlier…” Story at…
http://www.wsj.com/articles/u-s-durable-orders-down-1-8-in-may-1435062694
NEW HOME SALES (ABC News)
“The Commerce Department said Tuesday that new-home sales rose 2.2 percent last month to a seasonally adjusted annual rate of 546,000, the strongest pace since February 2008.” Story at…
http://abcnews.go.com/Business/wireStory/us-home-sales-climb-best-levels-2008-31963982
My cmt: Many people believe that new home sales are the number one recession indicator. In this case, no recession in sight.
CORRECTION COMING (Financial Sense)
Tom McClellan: "The signs of a dry up in liquidity are growing. I mentioned the advance-decline line that made its top back on April 24th and it hasn't been able to exceed that even though the price indices are chopping sideways and in some cases even making higher highs but that's not a good piece of news. That says that liquidity is starting to dry up and the longer that that divergence takes place and goes on, the more significant the message will be. I do think that we have a chance to make a higher price high into July...but ideally I want to be out of everything around the first week of August and looking to make money by harvesting some of the losses that we are going to see in Q3 and Q4." – Tom McClellan. Commentary at…
http://www.financialsense.com/contributors/tom-mcclellan/stock-market-peak-august-2016-bear-market
My cmt: The advance-decline line is not immediately intuitive to me so I track the percentage of stocks that have advanced over the last 10-days or 10-weeks. Over the last 10-days, the value is greater than 50% so more stocks have advanced than declined. No problem there. Over 50-days, the longer term view is not as good; only 49.5% of stocks on the NYSE have advanced. If this continues, it is a sign of an unhealthy stock market and McClellan will be right, especially if confirmed by other indicators. The good news is that the 50-day is improving. Let’s hope it continues.
FED TO RAISE RATES TWICE THIS YEAR? (Yahoo.com)
“U.S. stocks trimmed earlier gains and were mostly negative in late morning trading after comments from Federal Reserve Governor Jerome Powell that the economy could be ready for interest rate increases twice this year.” Story at…
http://finance.yahoo.com/news/us-stocks-wall-st-sheds-155613681.html
MARKET REPORT
- Tuesday, the S&P 500 was up about 0.1% to 2124 at the close.
-VIX fell about 5% to 12.11.
-The yield on the 10-year Treasury Note rose to 2.41%.
Short term the Markets look good due to the positive reading on Market Internals.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 55% at the close Tuesday. (A number above 50% is usually GOOD news for the markets.
New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +99 (It was +119 Monday.) The 10-day moving average of change in the spread rose to +20. In other words, over the last 10-days, on average; the spread has INCREASED by 20 each day. Internals remained Positive on the markets.
Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late. They are most useful when they diverge from
the Index. In 2014, using these
internals alone would have made a 9% return vs. 13% for the S&P 500 (in on
Positive out on Negative – no shorting).
Of course, few trend-following systems will do well in an extreme
low-volatility, nearly straight-up year like 2014.
NTSM
Tuesday, the NTSM long-term analysis remained HOLD. PRICE, VOLUME, VIX and SENTIMENT indicators are neutral, although (as always) sentiment remains extremely high.
MY INVESTED STOCK POSITION
I remain fully invested at 50% invested, mostly in
smaller cap-stocks in the long-term portfolio with some international stocks.
50% is conservative, but appropriate for a conservative retired guy. The Dow Jones US Completion Index (all stocks except the S&P 500 – the “S” fund in the TSP) remains ahead of the S&P 500. Since 1 February it is 4.4% ahead of the S&P 500. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 2.7% ahead of the S&P 500.
THRIFT SAVINGS PLAN (TSP) MEMBERS
My current TSP Allocation: 50%-G; 10%-C; 20%-S; 20%-I. (50% cash is too high for non-retirees, however, the “G”-fund did return 2.2% over the last 12-months and that is exceptional for risk-free money.)
