Tuesday, May 31, 2016

Personal Spending … Chicago PMI … Consumer Confidence … Stock Market Analysis

PERSONAL SPENDING/PCE PRICES (Business Insider)
“Personal spending surged more than expected in April, according to the Commerce Department. Spending rose 1.0% in the last month, above expectations of a 0.7% increase.” Story at…
http://www.businessinsider.com/personal-income-and-spending-april-2016-5
 
CHICAGO PMI CONTRACTING AGAIN (MarketWatch)
“A measure of Chicago-area economic activity fell in May back into contraction territory, an indication that the manufacturing sector is still sluggish. Chicago PMI fell 1.1 points to 49.3 in May…the lowest level since February…” Story at….
http://www.marketwatch.com/story/chicago-pmi-falls-back-into-contraction-territory-2016-05-31
 
CONSUMER CONFIDENCE SLIPS (ABC News)
“U.S. consumer confidence fell for a second month in May to the lowest level since November. The Conference Board said Tuesday that its index of consumer confidence slipped to 92.6 last month from 94.7 in April.” Story at…
http://abcnews.go.com/Business/wireStory/us-consumer-confidence-slips-39502553 

FACTSET EARNINGS INSIGHT (Factset)
“The blended earnings decline for Q1 2016 is -6.7%. The first quarter marked the first time the index has seen four consecutive quarters of year-over-year declines in earnings since Q4 2008 through Q3 2009. It also marked the largest year-over-year decline in earnings since Q3 2009 (-15.7%). Four sectors have reported or are reporting year-over-year growth in earnings, led by the Consumer Discretionary and Telecom Service sectors. Six sectors have reported or are reporting a year-over-year decline in earnings, led by the Energy, Materials, and Financials sectors.” Earnings Insight at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_5.27.16/view
My cmt: As can be seen above, earnings problems are not confined only to the Energy sector.
 
DOUG SHORT’S BIG FOUR INDICATOR DISCUSSION (Advisor Perspectives)
“There is… a general belief that there are four big indicators that the [NBER Business Cycle Dating Committee] weighs heavily in their cycle [think recessions] identification process. They are: Nonfarm Employment; Industrial Production; Real Retail Sales; Real Personal Income (excluding Transfer Receipts).”
For detailed discussion and analysis see Advisor Perspectives at…
http://www.advisorperspectives.com/dshort/updates/Big-Four-Economic-Indicators-PI
 
WHAT THE FED HAS WROUGHT (Real Investment Advice)
“It has taken a massive amount of interventions by Central Banks to keep economies afloat globally over the last seven years and there is little evidence suggesting growth is accelerating. In fact, there may be more evidence suggesting quite the opposite. With expectations rising the Fed will further tighten monetary policy in June, the lack of liquidity for the markets may become a much bigger issue not only for investors, but for the economy as a whole. In other words, excessive exuberance may have a high cost to pay.” – Lance Roberts. 
“In investing, the man who wins is the man who loses the least.” – Dick Russell. Commentary at…
https://realinvestmentadvice.com/technically-speaking-what-has-the-fed-wrought/
 
MARKET REPORT / ANALYSIS        
-Tuesday, the S&P 500 was down 0.1% 2097.
-VIX rose about 8% to 14.19 near the close. (Who woke up the options boys?They seem worried.)
-The yield on the 10-year Treasury slipped to 1.83%.
 
I commented last week that “the S&P 500 has moved slightly higher than my sell point last December, so if bullish conditions remain next week, I’ll get back in.” Money Trend indicators turned down Tuesday so I am not tempted yet. Further, there was an important negative signal Friday; the S&P 500 was overbought using the old tried and true Overbought/Oversold Ratio (based on advance decline data).
 
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator turned down, Tuesday, and that’s bearish.  I continue to hold short positions mostly in SH and some in QID in the trading portfolio only. Those will have to go if the market exceeds my pain-target of 2110 on the S&P 500.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 54.6% Tuesday. It was 56.8% Friday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks slipped to 51.6%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator (a Breadth measure) was down slightly, but remained positive – a neutral indicator in the short-term.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +103 Tuesday. (It was +76 Friday).  
 
The 10-day moving average of the change in spread remained minus-5. In other words, over the last 10-days, on average; the spread has decreased by 5 each day. Market Internals switched to neutral.


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, VIX & Sentiment indicators were all neutral.  The Price indicator (measuring the size of up vs down moves) was positive. The long-term NTSM indicator remains HOLD.


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
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. If the S&P 500 index closes above 2110, I plan to add to my stock allocation.
 
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 12-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html

Friday, May 27, 2016

GDP … Yellen Speech … Michigan Sentiment … Stock market Analysis

GDP REVISION (24/7 Wall St.)
“First-quarter GDP growth saw a revision, and it raised to 0.8% from the prior 0.5%. This report was incredibly slow, and it was also under the expectations.” Story at… http://247wallst.com/economy/2016/05/27/q1-gdp-revision-higher-yet-disappointing/

YELLEN SPEECH (MarketWatch)
“It’s appropriate for the Fed to gradually and cautiously increase our overnight interest rate over time,” Yellen said at a high-profile visit to Harvard University on Friday. That means a move could be appropriate in coming months, she said.” Story at…
http://www.marketwatch.com/story/caution-puts-lid-on-us-stock-futures-ahead-of-yellen-speech-2016-05-27
 
MICHIGAN SENTIMENT (Bloomberg)
Consumer confidence in the U.S. climbed to an almost one-year high in May as Americans grew the most upbeat about incomes after inflation than at any time in a decade, the University of Michigan’s report showed on Friday.” Story at…
http://www.bloomberg.com/news/articles/2016-05-13/consumer-sentiment-in-u-s-jumps-to-highest-level-in-a-year-io5u1p5c
 
MARKET REPORT / ANALYSIS        
- Friday, the S&P 500 was up 0.4% 2099.
-VIX dropped about 2% to 13.17 near the close.
-The yield on the 10-year Treasury rose to 1.85%.
 
We saw low volume today (about 20% below the monthly average) due to the 3-day Holiday.
 
I’ve mentioned that investors are skeptical of the rally due to lower than normal volume prior to today. Here’s further evidence of a bearish sentiment trend.  My sentiment indicator (%-bulls in Rydex bull/bear funds) has fallen from 76%-bulls to just 60%-bulls in just 3-weeks. The S&P 500 is up 2% over that period, but bullish sentiment is falling.  It is still very high, with 6 out of 10 investors bullish, but the trend is down.
 
The 5-10-20 Timer issued a BUY signal yesterday.  That is a simple system based on the 5-dEMA and the 10-dEMA higher than the 20-dEMA.  When combined with my market Internals (that are also bullish), I would normally issue a BUY signal now.  Given the low volume day, I am inclined to wait for a more believable signal, perhaps early next week. The S&P 500 has moved slightly higher than my sell point last December, so if bullish conditions remain next week, I’ll get back in. Previously I set 2010 as a re-entry point and that's where it may wind up.
 
There was one important negative signal today; the S&P 500 is overbought using the old tried and true Overbought/Oversold Ratio (based on advance decline data). Next week is also bearish for the markets in general with most years down (based on a piece I read somewhere).
 
Indicators are mostly bullish and trending generally higher, the new-high, new-low data reversed higher so my signals are getting more bullish.
 
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator remains in an uptrend, Friday, and that’s clearly a bullish signal.  In spite of that, I continue to hold short positions mostly in SH and some in QID. Those will have to go if the market exceeds my pain-target of 2110 on the S&P 500.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 56.8% Friday. It was 53.5% Thursday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks remained 51.7%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator (a Breadth measure) improved and remained positive – a bullish indicator in the short-term.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +76 Friday. (It was +74 Thursday).  
 
The 10-day moving average of the change in spread remained minus-2. In other words, over the last 10-days, on average; the spread has decreased by 2 each day. Market Internals switched to bullish.


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, the Volume, VIX & Sentiment indicators were all neutral.  The Price indicator (measuring the size of up vs down moves) was positive. The long-term NTSM indicator remains HOLD.


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
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. If the S&P 500 index closes above 2110, I plan to add to my stock allocation.
 
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 12-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html

Thursday, May 26, 2016

Unemployment Jobless Claims … Durable Goods Orders … ATA Truck Tonnage … Gunlach on the Market … Stock Market Analysis

JOBLESS CLAIMS (Bloomberg)
“Jobless claims fell for a second week, indicating the surge at the start of May reflected temporary dismissals. Initial applications for unemployment benefits dropped by 10,000 to 268,000 in the week ended May 21…” Story at…
http://www.bloomberg.com/news/articles/2016-05-26/initial-jobless-claims-in-u-s-fall-as-layoffs-prove-temporary

DURABLE GOODS ORDERS (Reuters)
"Orders for long-lasting U.S. manufactured goods surged in April on strong demand for transportation equipment and a range of other products, but continued weakness in business spending plans suggested the manufacturing rout was far from over…durable goods, items ranging from toasters to aircraft meant to last three years or more, jumped 3.4 percent last month…” Story at…
 
ATA TRUCK TONNAGE (ATA Association)
“American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 2.1% in April, following a 4.4% drop during March…Compared with April 2015, the SA index was up 2%...Year-to-date, compared with the same period in 2015, tonnage was up 3.5% on February’s strength. Excluding February, the index was up just 1.8% over the same months in 2015.” Press release at…
http://www.trucking.org/article.aspx?uid=fe643d6d-e992-4f6e-b53d-f73bda1ba2b9
My cmt: The important comparisons are year-over-year and those were up. Trucking does not agree with the Cass freight index (it was down) that I mentioned here…
http://navigatethestockmarket.blogspot.com/search?updated-max=2016-05-17T17:18:00-04:00&max-results=7&start=4&by-date=false 

GUNLACH ON THE MARKET (MarketWatch)
“Jeffrey Gundlach, founder of DoubleLine Capital, doesn’t have a lot of faith in the recent two-day surge for equities…
‘The market has been going sideways for 18 months, and when it breaks, either up or down, it should be a large move. So let the market prove itself. If it breaks to the upside, which I define as accelerating above 2,200, it is a good, low-risk, ‘go with’ buy.’” – Jeffery Gunlach.  Story at…
http://www.marketwatch.com/story/heres-what-gundlach-thinks-the-sp-500-needs-to-do-to-prove-itself-2016-05-25
 
MARKET REPORT / ANALYSIS        
-Thursday, the S&P 500 finished basically unchanged at 2090.
-VIX dropped about 3% to 13.43.
-The yield on the 10-year Treasury dropped to 1.82%.
 
The 5-10-20 Timer issued a BUY signal yesterday.  That is a simple system based on the 5-dEMA and the 10-dEMA higher than the 20-dEMA.
 
Indicators are mostly bullish and trending generally higher, but the new-high, new-low data is not yet confirming an upswing. The chart is the main issue now. Everyone is watching price action.  Simply put, the S&P 500 needs to break out higher to convince the bears that this is a bull market. 
 
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator remains in an uptrend, Thursday, and that’s clearly a bullish signal.  In spite of that, I continue to hold short positions mostly in SH and some in QID. Those will have to go if the market exceeds my pain-target of 2110 on the S&P 500.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 53.5% Thursday. It was 53.1% Wednesday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks improved to 51.7%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator (a Breadth measure) slipped some but remained positive – a bullish indicator in the short-term.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +74 Thursday. (It was +93 Wednesday).  
 
The 10-day moving average of the change in spread remained minus-2. In other words, over the last 10-days, on average; the spread has decreased by 2 each day. Market Internals remained neutral on the markets, but they are nearly bullish.


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         
Thursday, the Volume, VIX & Sentiment indicators were neutral.  The Price indicator (measuring the size of up vs down moves) was positive. The long-term NTSM indicator remains HOLD.


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
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. If the S&P 500 index closes above 2110, I plan to add to my stock allocation.
 
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 12-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html