New U.S. home construction fell more than projected in
August as a plunge in the South, the biggest region for building, more than
offset gains in the rest of the country. Residential starts declined 5.8
percent to a 1.14 million annualized rate…” Story at…
THE DECLINE OF THE MIDDLE CLASS (Advisor Perspectives)
Median is the point at which half of US incomes are higher
and half are lower. As Doug Short notes, it is the middle. The Middle was 90%
of the average in 1967. Now it’s only
70% of the average income. The Middle Class has lost a lot of ground.
Commentary at…
NOWHERE NEAR A MAJOR TOP (Financial Sense)
"We continue to be a little bit cautious over the
short-term while the S&P 500 trades under 2150-2160... [and] our advice to
investors is at least for the next few weeks heading into the September-October
window is to remain a bit cautious, expect higher volatility over the short-run
but at the same time get your shopping list together because at the end of the
day we think this is a temporary setback, which is going to give us another
buying opportunity quite frankly at a better price point in what we believe is
an ongoing secular bull market here in the US." Commentary at…
My cmt: I doubt that the market is in a cyclical bull
market. PE’s are at levels usually
associated with the start of a Bear not a Bull.
Still, that doesn’t mean that Markets won’t go higher.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up one point to 2139 at the
close.
-VIX was up about 3% to 15.92 at the close.
-The yield on the 10-year Treasury remained 1.7%.
The Market has been in a holding pattern this week.
Currently, indicators are pointed down and my collection of 16-indicators dropped
from -4 to -7. Money trend is slightly down.
Overall the most likely market direction is down, but signals
are not very strong. The market is waiting for the FED meeting to end
Wednesday. A drop below the prior low of 2126 on higher volume would confirm that
the pullback is likely to continue. I thinks it’s 50-50 whether we go up or
down in the near term.
SHORT TRADE
I am still holding short positions in SH (about half my
prior position) and QID (sold some today).
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) dropped to 46.7% Tuesday. It was 48.2% Monday. A number below
50% is usually BEARISH for the markets short-term.
On a longer term, the 150-day moving average of advancing
stocks dipped to 54.7%. A value above 50% generally indicates an up-trend. The McClellan Oscillator declined a little
from -20 to -25 (percentage calculation method).
New-highs outpaced New-lows, but just barely. The spread
(new-highs minus new-lows) dropped to +7 Tuesday. (It was +50 Monday.) The
10-day moving average of the change in spread was -15. In other words, over the
last 10-days, on average, the spread has decreased by 15 each day.
New-high/new-low data resumed pointing sharply down, .
Market Internals turned
negative on the market.
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).
LONG TERM INDICATOR
Tuesday the Price was positive. Sentiment & VIX indicators
were neutral; and Volume was negative. Overall the long-term indicator remained
HOLD. A significant drop would probably send the indicator back into SELL
status.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I reduced stock allocation to 30% stocks in the S&P
500 Index fund (C-Fund) Wednesday, 14 Sep in my long-term accounts based on the
Sell signal on 13 Sep.
I’ll switch back to BUY-mode soon if short-term
indicators turn up, assuming the long-term indicators remain OK.
This is a very
conservative view given that market conditions seem relatively sanguine right
now. Since I am retired, my conservative position is reasonable for me and I
sleep well. Additionally, I have missed opportunities recently by ignoring my
system and for now I will follow the system.
