Friday, March 4, 2016

Payroll Report … Trade Deficit Widens … Average Workweek Falls … Is the Bear Market Over … Stock Market Analysis

“Hiring was stronger than expected in February, signaling the economy is far from recession, but the fact there was no wage growth should keep the Fed from raising rates until at least midyear. There were 242,000 nonfarm payrolls added in February…” Story at…
TRADE DEFICIT RISES – EXPORTS PLUNGE (Global Economic Trend Analysis)
“Exports unexpectedly declined a sizable 2.1 percent in February. Imports fell 1.3 percent. As a result, the trade deficit widened to -45.7 billion….US exports shrinking is consistent with a rapidly cooling global economy…Those who think the US will decouple from the global economy are mistaken.” – Mike Shedlock.  Story at…
“The average workweek declined 0.2 to 34.4 hours ( consensus 34.6).” From…
My cmt: This clouds today’s job report somewhat. Most pundits focused on the jobs created today, but on an hourly basis, nearly 1-million jobs were lost last month. Why? - Because the average hours worked dropped 0.2 hours per worker. {318 million population x 59.8% (%-employed) x 0.2 hours (decline in avg. workweek) / 40hr/week = 0.95 or about 1 million.}  Ed Lazear, Professor of Economics at the Stanford Business School, made this clear during his appearance on CNBC today.
IS THE BEAR MARKET OVER (Real Investment Advice)
“…being overly bullish at the moment carries more portfolio risk (loss of capital if you wrong) than being bearish (missing out on early gains).” Commentary at…
- Friday, the S&P 500 was up 0.3% to 2000 at the close.
-VIX was UP about 0.5% to 16.8 as of 4PM.
-The yield on the 10-year Treasury rose to 1.88%.
The Overbought/Oversold Ratio remained “Overbought” Friday for the ninth day in a row. RSI was “Overbought” yesterday and is now slightly below the overbought level. This rise probably won’t last too much longer, but overbought conditions can remain for extended periods.
The S&P 500 is about 1% below the 200-dMA and the slope of the 200-dMA remains down. All in all, the Index is still in a down trend.
The short-term Money Trend indicator is still suggesting downside ahead.
I still am holding short positions in SH and QID. So far, these trades aren’t working.
(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 65.2% Friday vs. 63.7% Thursday. (A number above 50% is usually GOOD news for the markets.) I could only find one higher value in the last 7-years (18 Jan 2014). Really?  This is one of the most bullish 10-day periods since 1 January 2010? For many investors optimism is nearly unparalleled.
On a longer term, the 150-day moving average of advancing stocks improved to 50.1%. A value above 50% indicates an up-trend. The McClellan Oscillator (a Breadth measure) declined slightly but remained solidly positive.
New-highs again outpaced New-lows. The spread (new-highs minus new-lows) was +72 Friday. (It was +73 Thursday.)   The 10-day moving average of the change in spread improved to +8. In other words, over the last 10-days, on average; the spread has INCREASED by 8 each day. Market 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.
Friday, Price, Volume & VIX were positive. Sentiment was neutral. The long-term NTSM indicator is BUY. I have not followed the guidance yet. My guess is that the Index is very close to topping out.  We’ll see.
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) and on 15 Jan I reduced stock allocation to zero in long-term accounts.
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…