“U.S. producer prices were unchanged in October as the
price of services fell, another sign that inflationary pressure remains modest.
The Labor Department says that its producer price index was unchanged last
month after rising 0.3% in September.” Story at…
INDUSTRIAL PRODUCTION (WSJ)
“Industrial output was flat in October, as unusually warm
weather depressed demand for home and office heating, but the U.S.
manufacturing and mining sectors showed continued signs of stabilization.”
Story at…
CRUDE INVENTORIES (Reuters)
“U.S. crude oil inventories rose more than expected last
week on increased imports and a build at the storage hub in Cushing, Oklahoma,
the U.S. Energy Information Administration showed on Wednesday. Crude
inventories rose for the third consecutive week, increasing 5.3 million barrels
in week ended Nov. 11, compared with expectations for an increase of 1.5
million barrels.” Story at…
ROBOTS WON’T STEAL YOUR JOBS JUST YET (CNBC)
“…Messaging platforms that allow people to volley
questions and answers back and forth with robot customer service agents are a
long way off the type of technology that will replace actual human jobs, he said.”
Story at…
My cmt: Don’t tell this to the machinists and welders who
have lost manufacturing jobs. I toured a
Ford pick-up truck assembly plant about 15-years ago. All of the welding was
done by robots. They didn’t resemble humans. They were just a computerized arm with a
welding rod on the end, but they were robots none the less.
FOSBECK NEW-HIGH/NEW-LOW LOGIC INDEX SIGNALING TROUBLE
AHEAD
The following chart, from Dana Lyons via Lance Roberts, indicates
that extreme New-Highs and New-Lows on the same day are a sign of market
trouble. I track the the Fosbeck
New-High, New-low logic Index. It looks at the same phenomenon from a longer-term
perspective. The Fosbeck Index is indicating
short-term trouble. We’ll see if the trend of higher new-highs and new-lows continues.
Chart from
TIME TO BUY BONDS (Real Investment Advice)
Lance Roberts noted that the current Bond rout is a good
time to buy bonds since a drop in the equity markets will make bonds attractive
again. He said, “I continue to acquire bonds on rallies in the
markets, which suppresses bond prices, to increase portfolio
income and hedge against a future market dislocation. In other words, I
get paid to hedge risk, lower portfolio volatility and protect
capital. Bonds aren’t dead, in fact, they are likely going to be your best
investment in the not too distant future.” Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 0.2% to 2177 on
the day.
-VIX was up about 3% to 13.72 at the close.
-The yield on the 10-year Treasury was down to 2.22%.
The 5-dMA of %-bulls in selected Rydex/Guggenheim long/short
funds has fallen to 54% as of Tuesday’s close (today’s data is not available until
after I post this blog). I see that as
bullish. It hasn’t been that low since March of 2016 after the February
correction low.
While the market fixated on the stat that 9 of 10 days
were down recently (and I kept saying it was bullish), it is also noteworthy
that as of Wednesday there have only been 6 up-days in the last 20. That’s
bullish too.
I still think the S&P 500 can make new highs. The old high is 2090. I keep hearing this
rally is all about the election; I think it is about the “correction” that
ended Friday 4 November, before the election.
For the discussion of why I called it a correction and a discussion of Bullish
and Bearish Indications, see my earlier blog here…
Long term I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish. I continue to be concerned about rising
interest rates and the strengthening dollar, but for now I still think the
trend remains up.
TRADING PORTFOLIO (Small-% of the total portfolio)
2x S&P 500 ETF (SSO) Established 15 Nov.
WEDNESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 56.2 %. (53.4 % yesterday.) A number above 50% is usually
BULLISH for the markets short-term.
-150-day moving average of advancing stocks: Slipped to
52.5%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: was nearly unchanged at +88 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +92 (It was +111 yesterday.)
-10-day moving average of the change in spread: +17. In
other words, over the last 10-days, on average, the spread has increased by 17
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
Wednesday the Sentiment indicator was neutral. The Price
and Volume indicators were positive. The VIX indicator was neutral. Overall the
long-term indicator remained BUY. This just means that the conditions have been
positive recently. The actionable
buy-signal was last August and September.
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.
The Lance Roberts Bond
Commentary above (in the Fosbeck Logic Index discussion) seems like good advice
to me. My indicators will get me out of the market, but probably not before a
5% retreat or possibly more. Lance Roberts’ strategy (Buy Bonds on the dip) gets ahead of
the curve, especially in my TSP (Gov 401k account) since I can’t hedge or short
in other ways. The Total Bond market ETF (BND) is down about 3% since September.
That’s the F-fund in the TSP. If stocks do fall Bonds will rise in price and
the yields will fall. The current yield is 2.4%.
