“Filings for U.S. unemployment benefits declined last week for the first time in a month, heading back toward the lowest levels in more than a decade and signaling firings remain muted. Jobless claims fell 15,000 to 281,000 in the week ended July 11 from a revised 296,000 in the prior period…” Story at…
http://www.bloomberg.com/news/articles/2015-07-16/jobless-claims-in-u-s-fell-last-week-for-first-time-in-a-month
PHILADELPHIA FED (Nasdaq.com)
“Mid-Atlantic manufacturers are expanding at a modest pace this month…Cost pressures increased while pricing power remains weak. The Federal Reserve Bank of Philadelphia said its index of general business activity covering the regional factory sector fell to 5.7 in July from 15.2 in June…” Story at…
http://www.nasdaq.com/article/philadelphia-fed-business-index-slows-to-57-in-july-20150716-00685
MARKET REPORT/ANALYSIS
-Thursday, the S&P 500 was up about 0.8% to 2124 at the close.
-VIX was down about 8% to 12.11.
-The yield on the 10-year Treasury was unchanged at 2.35%.
VIX closed around 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.
After the pop in INTEL on their good earnings report, the stock is still up, but significantly off the after-hours highs yesterday. It would seem that a lot of people don’t want to own the stock at yesterday’s significantly higher price. Its earnings are still mostly from PC sales and PC sales continue to slow. Still with a PE below 13 and DIV of 3.3% it may be worth buying if the price is right, say below 28.
The 50-dMA of advancing stocks climbed to 49% Thursday. Below 50% is not good, but this stat has been approving.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 54% at the close Thursday. (A number above 50% is usually GOOD news for the markets.)
New-highs outpaced New-lows Thursday. The spread (new-highs minus new-lows) was +20. (It was +3 Wednesday.) 117 stocks made new lows Wednesday; that’s a high number. We’ll have to watch this; there shouldn’t be too many new-lows in an advancing market.
The 10-day moving average of change in the spread fell to +15 Thursday. In other words, over the last 10-days, on average; the spread has INCREASED by 15 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
I issued a BUY signal based on improved market internals Monday. Thursday the NTSM long term indicator is HOLD. All 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 (The following 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%
