“For Q3 2016, the blended earnings growth rate for the
S&P 500 is 2.7%. If the index reports growth in earnings for the quarter,
it will mark the first time the index has seen year-over-year growth in
earnings since Q1 2015 (0.5%)…The blended revenue growth rate for Q3 2016 is
2.6%. If the index reports growth in sales for the quarter, it will mark the
first time the index has seen year-over-year growth in sales since Q4 2014
(2.0%)…The percentage of companies issuing negative EPS guidance is 68% (53 out
of 78), which is below the 5-year average of 74%.” -Earnings Insight available from
FactSet at…
My cmt: “Blended” earnings and sales data includes data
from companies that have already reported and estimates of those yet to report.
This report from Factset is good news since both sales and earnings increased
and that may allow to markets to continue up.
It may not stop a correction, but it is likely to forestall a major
crash that some continue to predict.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 2.2% to 2132 on the
day.
-VIX fell about 17% to 18.71 at the close.
-The yield on the 10-year Treasury rose to 1.83% as
investors sold treasuries.
This was an impressive day today on average volume. The
FBI’s announcement that they would not recommend prosecution of Hillary Clinton
trumped short-term technical indicators and led to a world-wide equity bounce.
Short-term signals improved and are headed up; overall
they are still negative, but I take this as a bullish sign. There was late-day
buying today and that has not happened in a while. That’s a bullish sign.
Once again on Monday, the last 9 out of 10 days have been
down-days. That is a bullish sign and
today we saw the markets snap upward and they’ll probably move higher in the
near-term.
On the bearish side, Monday was a statistically-significant
day and that means that price-volume exceeded my statistical parameters and, in
about 60% of the time, that leads to a down-day the next day (Tuesday).
I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish. Short-term worries appear to be resolving to
the bullish side.
TRADING PORTFOLIO
For me, there are too many unknowns to trade now - perhaps
after the election.
MONDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 41.6 %. (39.3% yesterday.) A number below 50% is usually
BEARISH for the markets short-term.
-150-day moving average of advancing stocks: remained
52.7%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: improved from -183 to -55
(percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +45 (It was -45 yesterday.)
-10-day moving average of the change in spread: -5. In
other words, over the last 10-days, on average, the spread has decreased by 5
each day.
Market Internals improved
to Neutral 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
Monday the Sentiment indicator was negative. The Price
indicator was positive.
VIX and Volume were neutral. Overall the long-term
indicator improved from its near sell indication last week, but 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 2016 in my long-term
accounts.
Remainder is 50% G-Fund. This is a conservative retiree allocation.
