PPI (Marketwatch)
“U.S. producer prices rose again in September as
wholesale inflation keeps creeping higher, albeit from very low levels. The
producer price index advanced 0.3% last month…,” Story at….
RETAIL SALES (WSJ)
“U.S. retail sales rebounded in September, a sign that
consumers will continue to support economic growth during the second half of
the year, though growth in household spending has slowed since the spring. Sales
at retail stores, online retailers and restaurants increased 0.6%...”
Story at…
BUSINESS INVENTORIES (CNBC/Reuters)
“U.S. business inventories rose in August, boosted by a
larger increase in stocks at retailers than previously estimated, supporting
views that inventory investment will contribute to economic growth in the third
quarter. The Commerce Department said on Friday business inventories increased
0.2 percent after being unchanged in July.” Story at…
MICHIGAN SENTIMENT
The University of Michigan sentiment index fell
unexpectedly in October…The expectations index 6-months ahead is the lowest
since September 2014 at 76.6.” Story at…
THEORIES EXPLAINING SLOW GROWTH (Financial Sense)
“There are two main interpretative frameworks that seek
to explain slow growth and low interest rates. The first is associated with
Rogoff and Rinehart. They argue that the recent economic performance is largely
what should be expected following a debt crisis. As deleveraging works its way
through the system, it may take several years, but ultimately prove transitory.
The other interpretative framework has been suggested by
former Treasury Secretary Summers…Because of various changes in the structure
of the economy, insufficient aggregate demand may have become a semi-permanent
characteristic of the economy. The proposed solution is a large public works
investment program.
A new paper by Federal
Reserve economists sketch out a third paradigm. The economists argue that the
slowing of growth and the decline in interest rates since 1980 can be explained…[by]…demographic
changes…” Commentary at…
My cmt: A “large public works investment program” is needed due to aging bridges,
roads, dams and other infrastructure, but if paying for it means more debt,
this country is likely doomed. Imagine the growth problems when Social Security
and Medicare must be cut. None of the
candidates are discussing the debt.
FIX THE DEBT (Fixthedebt.org)
“Currently, the national debt held by the public is over
$14 trillion, which is 75 percent of the country’s economy, as measured by
Gross Domestic Product (GDP). The gross debt, which includes money owed to
other parts of the federal government, is more than $19 trillion, or 105
percent of GDP. Throughout history, the United States has normally maintained
some amount of debt. However, with the exception of a brief period during and
immediately after World War II, debt levels have never been as high as they are
now.” Information at…
My cmt: While the fools in Washington argue over who is
the biggest liar, the debt increases daily.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was unchanged at 2133.
-VIX dropped about 3% to 16.12.
-The yield on the 10-year Treasury rose to 1.79%.
At the high this morning I ran the numbers and indicators
were still pointing down. Later in the day it only got worse. I had expected
that the market was close to turning up, but it was not to be. Instead of up, my
short-term indicators are now pointed down. “Money Trend”, “Sum of all
indicators” and “Smart Money” (late day action) are all pointed down as of
Friday’s close. The chart is neutral but if the Index drops from here the chart
would be negative too. The percentage of advancing stocks reversed and turned
down again today on a 10-day basis. Indicators suggest that the most likely
direction for the markets next week is down.
One of the few bullish signs is Bollinger Bands. The S&P
500 Index is near its lower Bollinger Band and that is a bullish indicator.
Long-term, I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – that’s hold my nose bullish.
TRADING PORTFOLIO
No trading: I was busy in the afternoon.
FRIDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 42.7%. (44.7% yesterday.) A number below 50% is usually BEARISH
for the markets short-term.
-150-day moving average of advancing stocks: 53.4%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: improved from -56 to -49
(percentage calculation method).
-New-highs minus new-lows: -29 (It was -6 yesterday.)
-10-day moving average of the change in spread: -7. In
other words, over the last 10-days, on average, the spread has decreased by 7
each day.
Market Internals switched
from neutral to 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
Friday the VIX indicator was negative. Price, Volume,
& Sentiment indicators were neutral. Overall the long-term indicator
remained HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I increased stock allocation to 50% stocks in
the S&P 500 Index fund (C-Fund) Friday, 23 Sep in my long-term accounts
based on a number of indicators. Remainder is 50% G-Fund. This is a
conservative retiree allocation.
