The U.S. Census Bureau and the Department of Housing and Urban Development reported Friday morning that new housing starts in June rose to a seasonally adjusted annual rate of 1.174 million, an increase of 9.8% from the upwardly revised May rate of 1.069 million and an increase of 26.6% compared with the June 2014…” Story at…
http://247wallst.com/housing/2015/07/17/new-housing-starts-jump-as-new-apartment-buildings-soar-28-in-june/
HOMEBUILDERS NEED SKILLED WORKERS
“Single-family home construction fell to a three-month low in June, which is usually the busiest time for homebuilding. Even building permits are not showing signs of robust growth. Builders claim there is good demand, but they complain they're handcuffed by a lack of skilled labor to build new homes. The builders' industry trade group calls the incidence of labor shortages nationwide "surprisingly high," given the fact that homebuilding has barely recovered from its 2008 crash.” Story at…
http://www.cnbc.com/2015/07/17/homebuilders-take-a-beating-from-lack-of-labor.html
I did a search on skilled workers for home construction and found that this problem has been going on for years. It makes no sense; perhaps workers would rather collect unemployment or work at fast food when they could make $50k working construction. Back in 2000 this situation was so bad that one of the major contractor associations made a nationwide pitch over the internet to high-school students trying to attract non-college bound students into building trades. Part of the problem is “No-Child Left Behind.” Many school systems have ended so called Career and Technical Education (CTE) programs. It’s time to bring them back. Not everyone is well served by continuing on to college or junior college.
MICHIGAN SENTIMENT (Down)
http://www.theglobeandmail.com/report-on-business/international-business/us-business/us-consumer-sentiment-falls-in-july/article25546333/
Overall, this is the 8th-month above 90 so the slight reduction since June is not a big deal.
IS THE SECULAR BEAR MARKET OVER?
The last major index to exceed its 2000 high was the
Nasdaq Composite and it is now over 2% above its all-time high. Conclusion: The bear market must be over
right? Maybe not says Ed Easterling of
Crestmont Research:
Crestmont Research…
“Of course you’re getting impatient. When will the stock
market shift from secular bear to secular bull—or did it already?...”
MARKET REPORT/ANALYSIS
-Friday, the S&P 500 was up about 0.11% to 2127 at
the close. -VIX was down about 1% to 11.95.
-The yield on the 10-year Treasury was unchanged at 2.35%.
It’s unusual to see an up-day when almost twice as many stock declined rather than advanced. I’d guess Monday will be down, but I’m not surprised to see some profit taking after the big jump from the recent bottom.
VIX & SENTIMENT. VIX closed below 12 and that is a level that has often preceded or coincided with a short-term market top over the past several years. This time I don’t expect it. VIX is now measuring confidence in the markets. That confidence may be overly-bullish, but that in itself does not mean a drop is imminent. Sentiment has been dropping and that is bullish.
Sentiment (5-dMA of %-bulls in selected Rydex/Guggenheim long/short funds) has fallen from 85%, 2-weeks ago, to 76% yesterday (data is a day late). That may not sound like much, but it is huge for a stat that moves slowly.
The 50-dMA of advancing stocks REMAINED 49% Friday. Below 50% is not good.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 53% at the close Friday. (A number above 50% is usually GOOD news for the markets.
In a negative reversal, New-lows outpaced New-highs Friday. The spread (new-highs minus new-lows) was -120. (It was +20 Thursday.) That’s a big reversal and is not good news for the bulls.
The 10-day moving average of change in the spread dipped to minus -7 Friday. In other words, over the last 10-days, on average; the spread has DECREASED by 7 each day.
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
I issued a BUY signal based on improved market internals Monday. Friday the NTSM long term indicator is HOLD. All long-term indicators are neutral.
MY INVESTED STOCK POSITION
On Monday, 13 July, I increased my investments from 30% invested to 50% invested in stocks. I spilt stock investments roughly equally between S&P 500, Euro/pacific ETF (EFA), and the Dow Jones Completion Index (DWCPF) as noted in an earlier post.
TSP ALLOCATION (This is a conservative position most appropriate for retirees or conservative investors.) I think all investors would be well served to cut their stock investments to a lower than normal (for each individual) allocation. Until longer term technicals look better, the old adage that one’s stock allocation should equal your age subtracted from 100 seems reasonable. (40years old: 100-40 = 60% in stocks) 50% would be the minimum.
G-Fund (Risk-free yielding 2.1% over the last 12-months): 50%
C-Fund (S&P 500): 15%
S-Fund (DWCPF): 15%
I-Fund (EFA): 20%
