“A gauge of U.S. factory activity rose in October, a sign
the manufacturing sector could be stabilizing after two years of challenging
conditions. The Institute for Supply Management on Tuesday said its purchasing
manufacturers’ index rose to 51.9 in October from 51.5 in September.” Story at…
CONSTRUCTION SPENDING (Reuters)
“U.S. construction spending unexpectedly fell in
September as outlays on private nonresidential structures recorded their
biggest decline in nine months, which could see a mild downward revision to the
third-quarter economic growth estimate. The Commerce Department said on Tuesday
that construction spending slipped 0.4 percent…” Story at…
AUTO SALES (Forbes)
“U.S. automakers said sales slipped again in October
despite a flurry of promotions geared toward drawing people to the car
lot…During October, Fiat Chrysler said sales fell 10% …General
Motors’s sales fell roughly 2%...” Story at…
MARGIN DEBT – A TOP COMING? (Advisor Perspectives)
Commentary and charts at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down 0.7% to 2112 on the
day.
-VIX rose about 7% to 18.25 near the close.
-The yield on the 10-year Treasury slipped to 1.82%.
The “Calm-Before-the-Storm” indicator (based on
statistical analysis of market action) remained bearish again today even after
the big drop. This indicator suggests
there’s more downside ahead. Chart wise, the Index broke the 2126 area of
support that has been holding since early September. The S&P 500 is 1.5%
above its 200-dMA; that’s a support point, but the Index might just test the
Brexit level of 2000. The Money Trend indicator
was trending down today. Still, there are some bullish signs.
Bollinger Bands signaled “oversold” and RSI was close to
“oversold” as well. Tuesday was a statistically significant down-day and, in
about 60% of the time, the next session is an up-day. There was some late-day
buying today and it has been a while since we have seen that.
Overall, my guess is we have further to fall, but we’ll
see - Wednesday should bring a bounce.
Long-term, I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish.
TRADING PORTFOLIO
TUESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 44.2%. (49.3% yesterday.) A number below 50% is usually
BEARISH for the markets short-term.
-150-day moving average of advancing stocks: 52.6%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: declined from -38 to -58
(percentage calculation method).
-New-highs minus new-lows: -53 (It was -16 yesterday.)
New-lows again outpaced new-highs – not a good sign.
-10-day moving average of the change in spread: -10. In
other words, over the last 10-days, on average, the spread has decreased by 10
each day.
Market Internals switched
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
Tuesday the VIX indicator is 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 2016 in my long-term
accounts.
Remainder is 50% G-Fund. This is a conservative retiree allocation.
