“The number of Americans filing for unemployment benefits
fell more than expected last week, underscoring the robustness of the labor
market.
Initial claims for state unemployment benefits dropped
11,000 to a seasonally adjusted 254,000 for the week ended Nov. 5…” Story at…
TRUMP IS BULLISH (Financial Sense)
…there is not an instance that I can find where you’ve
had a Republican in the White House and Republican House and Senate where the
stock market has not done pretty well. If he (Trump) does get to cut corporate
taxes to 15%—if you run the numbers on that—that could boost S&P earnings
by 18%, making the estimates that S&P has for next year more realizable…I
think (a Trump win) is a tailwind. I think less regulation and rolling back
some of the executive orders that were done by fiat—without Congressional
approval—are bullish…” – Jeffery Saut. Commentary at…
COMMODITY INDEX AS LEADING ECONOMIC INDEX (Financial Sense)
“…we have shown a positive base building in the leading
economic indicators (LEI) of commodity prices led by Oil and the industrial
metals. Further, we have run through recent signs of renewed economic growth
for a possible LEI breakout with a rare unity of global economic engines in
China, Europe, US and Emerging markets. Uncertainty of an untainted US
President-elect, a Fed rate hike in December and Brexit repercussions into
March could cap near-term enthusiasm. The truth will become apparent in 2017,
but the signs are encouraging that a recession is still not in the forecast for
the next couple of years without some exogenous event.” Charts and Commentary
at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.2% to 2167 on
the day.
-VIX rose about 3% to 14.74 at the close.
-The yield on the 10-year Treasury climbed again to 2.17%.
(One wonders how much higher yields can go before stock investors begin to
worry.)
Thursday, once again there was unusually high volume on
the NYSE. This is not the norm when a
correction ends. Usually as the market
climbs from a correction, it climbs on low volume as traders remain leery. In
this case, the correction was only down 4.8% and that is very shallow. One
usually wouldn’t even call it a correction, but we did go 58-days before making
a bottom (assuming it’s over) and the end included 10-straight days down. That looks like a correction to me. Still, the
current euphoria is a concern if it continues.
Summary of indicators:
Bullish signs: Short-term signals continue to improve;
Market Internals remained all-positive; Thursday I got a buy signal from XLI vs
S&P 500 spread and that is very rare; investors have gotten very bullish,
but we knew that already just looking at price action.
On the bearish side: The S&P 500 is looking a bit
toppy though I have no sell signal in topping indicators yet; the Bollinger
Bands are now nearly overbought and that is a bit worrisome; RSI is 58 and
that’s in neutral territory so I am not too concerned about the Bollinger Band
signal…yet.
Sentiment remains high at 80%-bulls, but that is a
long-term indicator and it may remain elevated for a considerable time. Other
long-term indicators are improving.
Short-term I sold my trading position in SSO somewhat
impulsively based on poor late-day action, Bollinger bands, declining stocks
outpacing advancers and a topping indicator that is getting stretched, though
not yet a sell. The leveraged ETF’s
(SSO) move quickly and a down-day can wipe out half the gains or more. I may
reestablish this one soon.
Long term I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish.
TRADING PORTFOLIO (Small-% of the total portfolio)
2x S&P 500 ETF (SSO) Established 9 Nov. SOLD 10 Nov:
Gain: +3.5%
THURSDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks advancing
(NYSE): 47.1 %. (45.2 % yesterday.) A number below 50% is usually BEARISH for
the markets short-term.
-150-day moving average of advancing stocks: slipped to
52.7%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: improved from +2 to -5 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +106 (It was +83 yesterday.)
-10-day moving average of the change in spread: +11. In
other words, over the last 10-days, on average, the spread has increased by 11
each day.
Market Internals remained
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 Sentiment indicator was negative. The Price indicator
was positive. Volume & VIX 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.
