“ Empire State manufacturing index, which measures conditions in the New York area, stayed in deep negative territory for the third month in a row for the first time since the depths of the Great Recession…the Philadelphia Fed’s manufacturing index remained in negative territory for the second straight month…The Empire Index has fallen … to negative 11.4 in October. The Philadelphia index … has dropped to negative 4.5.” Story at….
http://www.marketwatch.com/story/philly-fed-empire-state-both-show-grim-conditions-in-manufacturing-2015-10-15
Manufacturing is taking it on the chin, but so far jobs are holding up.
UNEMPLOYMENT CLAIMS (Bloomberg)
"The number of Americans submitting applications for jobless benefits unexpectedly declined last week to match the fewest in four decades. Initial unemployment claims dropped by 7,000 to 255,000 in the week ended Oct. 10…” Story at…
http://www.bloomberg.com/news/articles/2015-10-15/jobless-claims-in-u-s-decrease-to-match-lowest-level-since-1973
CPI (Econotimes)
“CPI declined for the second month running in September. Energy prices were the only drag on headline CPI, while core and food prices made positive contributions. Headline CPI fell 0.2% m/m in seasonally adjusted terms (Barclays/consensus -0.2%).” Story at…
http://www.econotimes.com/CPI-declines-as-energy-drag-continues-but-core-inflation-strength-returns-103590
My cmt: Since energy costs are the only negative, this is a not a bad report. While you may hear the fear mongers talk about deflation, lower gasoline prices are not a sign of deflation; rather they are similar to a tax cut for the economy. Lower fuel prices put more money into consumers’ hands.
ATLANTA FED LOWERS GDP ESTIMATE (Atlanta FED)
Atlanta FED at…
https://www.frbatlanta.org/cqer/research/gdpnow.aspx?panel=1My cmt: Note that the Fed’s GDP estimate was near 2 just 3-weeks ago. Now it is below 1.
MARKET REPORT / ANALYSIS
-Thursday, the S&P 500 was UP about 1.5% to 2024 at the close.
-VIX finished down about 11% to 16.05. (The options boys are convinced the correction is over; or perhaps they are counting on the Fed to save investors again.)
-The yield on the 10-year Treasury rose to 2.02%.
The advance-decline ratio shows that an overbought condition remains in place while Relative Strength Indicator (a measure of the size of up-moves –RSI) is not yet overbought. “Overbought” suggests some downside ahead, but it is not a crash indicator.
Big moves up (like Thursday) often precede down-days or even reversals (in this case down). Whether that will be the case this time remains to be seen. I don’t think we are out of the woods yet on this correction. Sentiment never got low enough and there was never a successful test, at least as I measure it. News hasn’t been good either, but investors seem to be back in the bad-news-is-good-news mood. The news is deteriorating so fast (Philly Fed, NY Fed, Atlanta Fed) one wonders whether the market will wake up and go Holy @#$%!
Still, my call for a retest of the low looks less likely now given the recent large drop on the VIX. Some down-days for the S&P 500 now would make me more confident regarding a re-test.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 63% Thursday vs. 60% Wednesday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 50-day moving average of advancing stocks rose to 50.1%, a good news signal.
In a POSITIVE REVERSAL, New-highs outpaced New-lows Thursday. The spread (new-highs minus new-lows) was +19. (It was -11 Wednesday.) The 10-day moving average of the change in spread remained +17 Thursday. In other words, over the last 10-days, on average; the spread has risen by 17 each day. The internals remain neutral on the markets.
NTSM
Thursday, the NTSM long term indicator was HOLD. The Volume indicator is positive. VIX, Price & Sentiment indicators are neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONG-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 70%
C-Fund (S&P 500): 15%
I-Fund (EFA): 15%
