http://www.bloomberg.com/news/2013-11-07/consumer-confidence-in-u-s-drops-for-sixth-consecutive-week.html
TAPER
Still, this probably means taper in March (the current
consensus) is still on; the market may worry that it could even be sooner. With a market priced for perfection, it
wouldn’t take much to start a correction.
GDP (Bloomberg)
“Gross domestic product rose at a 2.8 percent annualized
rate after a 2.5 percent gain the prior three months…The median forecast of
economists surveyed by Bloomberg called for a 2 percent advance. Consumer spending climbed at the slowest pace
since 2011 and corporate investment was the weakest in a year…“You’ve got this big
jump in inventories, and that’s clearly in excess of what the flow of spending
is,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “If you stockpile all this
inventory but your sales don’t really change all that much, then what you’re
going to do in the next quarter is cut back your orders, cut back
production.” Story at…http://www.bloomberg.com/news/2013-11-07/economy-in-u-s-expands-at-a-2-8-rate-as-inventories-climb.html
Doug Short has a good discussion of GDP history at…
http://advisorperspectives.com/dshort/updates/GDP-Current-Release.php
BLOOMBERG CONSUMER CONFIDENCE (Bloomberg)
“Consumer confidence in the U.S. fell for the sixth week
in a row, reaching the lowest level in a year as Americans struggled to make
ends meet. The Bloomberg Consumer Comfort
Index declined to minus 37.9 in the week ended Nov. 3, the worst
reading since October 2012, from minus 37.6. The one-week drop was the smallest
since the partial government shutdown ended in the middle of last month.” Story at… http://www.bloomberg.com/news/2013-11-07/consumer-confidence-in-u-s-drops-for-sixth-consecutive-week.html
JOBLESS CLAIMS REPORT (Econoday)
Jobless claims came in at 336k with and expected value of
335k – right in line. As stated by Econoday: “Today's report points to a return
to a stable but slow jobs market.” Story
at…http://basic.econoday.com/byshoweventfull.asp?fid=455652&cust=mam&year=2013&lid=0&prev=/byweek.asp
The story noted that the blip-up in October indicated in
the chart below is due to counting problems in California and claims from
Government contractors during the Government shutdown
http://basic.econoday.com/byshoweventfull.asp?fid=455652&cust=mam&year=2013&lid=0&prev=/byweek.asp
MARKET REPORT
Thursday, the S&P was down 1.3% to 1747 (rounded).
VIX was up about 10% to 13.91. Thursday, the S&P was down 1.3% to 1747 (rounded).
Today was statistically significant and odds are that
tomorrow will be an up-day by about a 62% probability. This time, I wouldn’t play that game; this
could be a correction start.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing fell to 45%. (A number below 50% for the 10-day average is
generally bad news for the market.)
New-highs outpaced new-lows, Thursday, leaving the spread
(new-hi minus new-low) at +73 (it was +146 Wednesday). The 10-day moving average of change in the
spread was minus -13. In other words
over the last 10-days, on average, the spread has decreased by 13 each day.
Market Internals are now negative so we’ll have to see if
this is going to be a correction or simply another chance for the dip-buyers to
move in.
Market Internals are a decent trend-following analysis of
current market action, but should not be used for short-term trading except
perhaps to augment another system.
NTSM ANALYSIS
Sentiment is
negative. All other NTSM indicators are neutral. Overall,
NTSM is neutral. That is a broken record.
MY INVESTED POSITION (NO CHANGE)
I remain about 20% invested in stocks as of 5 March
(S&P 500 -1540). The NTSM system
sold at 1575 on 16 April. (This is just
another reminder that I should follow the NTSM analysis and not act emotionally
– I am under-performing my own system by about 2%!) I have no problems leaving 20% or 30%
invested. If the market is cut in half
(worst case) I’d only lose 10%-15% of my investments. It also hedges the bet if I am wrong since I
will have some invested if the market goes up.
No system is perfect.
I still lean toward getting back in, after a pullback, to
speculate on a final ride to the top.
NTSM did give several buy signals over the weeks of 14 and 21 Oct, but
the market just looks too frothy to rush back in…we’ll see if the market will
pullback so I can join the insanity. If
not, cash is fine.
