The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to sustained labor market strength even as the pace of job growth is slowing. Initial claims for state unemployment benefits decreased 4,000 to a seasonally adjusted 259,000 for the week ended Sept.3, the lowest level since mid-July…” Story at….
http://www.reuters.com/article/us-usa-economy-idUSKCN11E1LF
CRUDE INVENTORIES (Business Insider)
The Energy Information Administration said on Thursday that commercial crude oil inventories fell by 14.5 million barrels…The drop was the largest dating back to 1999…” Story at…
http://www.businessinsider.com/crude-oil-price-spikes-after-inventory-drop-september-8-2016-9
TRANSPORTATION INDICATING POSSIBLE DOWNTURN (CNBC)
“If the transportation industry is any indicator — and it usually is — then the economy could be on the brink of a downturn…”
Chart and story at…http://www.cnbc.com/2016/09/08/transportation-planes-trains-and-trucks-point-to-economic-downturn.html
My cmt: I am over calling recessions. Currently, the INDUSTRIAL SELECT SECTOR SPDR ETF (XLI) (a basket of cyclical industrials) is outperforming the S&P 500 on most timeframes. If there was recession in the wind, investors would be bailing out of cyclical stocks.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.2% to 2181 at the close.
-VIX was up about 5% to 12.51 at the close.
-The yield on the 10-year Treasury jumped to 1.62%.
Extreme calm periods in the markets are exhibited by
small moves in price over an extended period. The measurement period is
typically about 20-days for Bollinger Bands, but the condition can last
indefinitely if the calm remains. This
condition can be measured by tight Bollinger Bands or my own calculation of
standard deviation of price-volume. When
there is also a consistent rise in price concurrent with, or prior to the calm it
usually indicates a correction or at least a 5% pullback is approaching. When
complacency sets in, it doesn’t take much to upset the apple cart. That’s what
we have now and it's been going on for a month.
VXX Trade. The “calm-before-the-storm” indicator (low standard of deviation in recent market moves) still remains down. That suggests that VXX remained a buy as of Thursday’s close. I am troubled by the trade that has not worked so far.
SHORT TRADE
I am still holding short positions, but I did exit some of the short positions and transitioned into VXX. (This books a loss for the trade for tax purposes and maintains a bearish stance.) I caution again to take it easy on this high risk stuff – keep the trading portfolio small. I will exit my SH positions and transition into SDS tomorrow in the PM. Next week if the market is up I’ll be out; if not I’ll recoup losses.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 54.8% Thursday. It was 53.4% Wednesday. A number above 50% is usually BULLISH news for the markets.
On a longer term, the 150-day moving average of advancing stocks dipped to 54.9%. A value above 50% generally indicates an up-trend. The McClellan Oscillator declined from +12 to +1 (percentage calculation method).
New-highs outpaced New-lows. The spread (new-highs minus new-lows) slipped to +174 Thursday. (It was +232 Wednesday.) The 10-day moving average of the change in spread was +7. In other words, over the last 10-days, on average, the spread has increased by 7 each day. Market Internals switched to positive 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
Thursday the Price indicator was positive; Sentiment, VIX and & Volume indicators were neutral. The long-term indicator is HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONOn 12 July I increased my invested position in my retirement account to 25% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP). I added to that position Thursday 21 July bringing my invested total up to 40% in stocks. I expect to add more stocks should we get the anticipated pullback.
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions. I’m following my system now, especially since the Index has climbed above my initial sell-point of 2100 on the S&P 500 back in November 2015.
