Tuesday, February 9, 2016

Job Openings Labor Turnover (JOLTS) Report … Wholesale Inventories … Stock Market Analysis

“The essence of portfolio management is the management of RISKS, not the management of RETURNS.” - Benjamin Graham
“The number of job openings increased to 5.6 million on the last business day of December, the U.S. Bureau of Labor Statistics reported today.” Press release at…
This is the second highest on record. For analysis see Advisor Perspectives at…
“The Commerce Department said on Tuesday wholesale inventories dipped 0.1 percent. November inventories were revised down to show a 0.4 percent drop instead of the previously reported 0.3 percent decline.” Story at…
This may cause a downward revision of Q4 GDP.
-Tuesday, the S&P 500 was down 0.1% to 1852 at the close.
-VIX was up about 2% to 26.54.
-The yield on the 10-year Treasury slipped to 1.73%.
My Money Trend indicator is clearly down Tuesday. It has been a pretty good indicator recently. I closed out long positions at a loss.  I had been doing extremely well this year in my short term trading, but the last 2-trades have been losers so I’ll step back until the cross-currents die down.
Monday looked like a tradable bottom at the close, based on technical indicators, but the market didn’t agree and there was no confirmation Tuesday; it looks like there will be a longer wait before there is a significant bottom, even in the short-run.  There was another lower-low Tuesday, but Internals were worse, so no bottom yet.
If I had to guess, 1820 looks like a short term bottom to me, but only for a bounce of 5-10%.
(I am getting data from various sites. Some of the numbers are subject to minor revision so the previous day’s numbers may be slightly different than reported yesterday.)
The 10-day moving average of the percentage of stocks advancing (NYSE) is 46.6% Tuesday vs. 51.8% Monday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 150-day moving average of advancing stocks dipped to 48.5%. A value below 50% indicates a down trend. The McClellan Oscillator (a Breadth measure) was down and remained negative on the day.
New-lows outpaced New-highs. The spread (new-highs minus new-lows) was minus-412 Tuesday. (It was -392 Monday.)   The 10-day moving average of the change in spread fell to minus-36. In other words, over the last 10-days, on average; the spread has DECREASED by 36 each day. Market Internals (based on 10-dMA) switched to negative 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.
Tuesday, the Volume and VIX indicators were negative. The Price & Sentiment indicators were neutral. The long-term NTSM indicator is HOLD.

On 30 Dec I reduced my invested position in my retirement account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP). Friday, 15 Jan I reduced stock allocation to zero in long-term accounts. That leaves 100% invested in cash yielding about 2%.  Short-term bonds would be OK too.
The S&P 500 peaked in Mid-May and has not been able to break higher in the past 9-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
Even if that is true, there could still be a rally for 2 or 3-months.