Briefing.com reported that the ADP numbers came in at 215,000 jobs created for November versus the consensus forecast of 160,000, so this was a big beat. Stats from…
http://www.briefing.com/investor/calendars/economic/2013/12/02-06
Futures fell on the report – good news is bad news and
the Santa Rally (if there is one) depends on the FED, according to CNBC…
SANTA CLAUSE RALLY? (CNBC)
"There has typically been a negative reaction to any
of the strength in the economy because everyone worries what the Fed is going
to do. But the market then resumes its upward track," said Jim Swanson,
chief investment strategist at MFS Investment Management…Lou Brien of DRW
Trading Group said…investors should not obsess about whether the market goes
higher in December, because "we've had a Santa Claus rally most of the
year with the Fed acting as Santa's elves." Story at…http://www.cnbc.com/id/101245446
I am not so sure that the FED can continue to prop this
market up. We’ll see.
US SERVICE SECTOR GROWTH SLOWS IN NOVEMBER (CNBC)
“The Institute for Supply Management said its services
index fell to 53.9 last month from 55.4 in October. The reading was below a
forecast for 55.0, according to a Reuters survey of economists. A reading above
50 indicates expansion in the sector.” Story at…http://www.cnbc.com/id/101246291
…and the S&P 500 rocketed upward after the report…Bad
news is good news…so it’s all about the Taper!
On the other hand, Briefing.com says, “The market generally doesn't pay
much attention to the services index because the services sector is less
cyclical than the manufacturing sector” so the bounce from the disappointing ISM
number may not hold.
GEN RE CIO LETTER TO INVESTORS: “HISTORY IGNORED AGAIN”
(ZeroHedge)
“…the Fed’s program [has] created a systemic risk in the
world financial system for which they take little or no responsibility, because
that which happens outside the U.S. is not their assignment. But as custodians
of the reserve currency, it ends up that way…We may be seeing the leading edge
of a wave of credit problems among corporate borrowers in emerging market
economies. Lest one think it does not affect the U.S. and other developed
market countries, recall the Asian crisis…” This was a really good read from a
Berkshire Hathaway owned company CIO.
Story and Gen RE letter at….http://www.zerohedge.com/news/2013-12-03/world-upside-down-cio-buffetts-genre-issues-direst-warning-yet
BUY-THE-DIP
The NTSM sentiment was 78%-bulls at the close Tuesday so
almost 4 out of 5 traders were betting long at the close on Tuesday. The 5-day Sentiment indicator was 74%-Bulls
thru Tuesday. This is an extreme, overly
bullish value.
MARKET REPORT
Wednesday, the S&P was down about 0.1% to 1793 (rounded) and again, there was late-day buying so the pros don’t believe this “pull-back”.
Wednesday, the S&P was down about 0.1% to 1793 (rounded) and again, there was late-day buying so the pros don’t believe this “pull-back”.
VIX was up 1%
to 14.70. That’s not much so the options
players are not concerned either.
The S&P 500 is 2.6% above the 50-dMA and 8.4% above
the 200-dMA. Those are 2-points where
this pullback may stall, if it even manages to get that far. QE remains and the market hinges on the
outcome of the next Fed meeting. Traders
will be watching the employment report Friday since that will give hints about
the future of QE. Good news will be bad
news for the markets.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing remained at
49% at the close Wednesday. (A number below
50% for the 10-day average is generally bad news for the market.)
New-lows outpaced new-highs Wednesday, leaving the spread
(new-hi minus new-low) at minus-26 (it was -33 Tuesay). The 10-day moving average of change in the
spread was minus 6. In other words over
the last 10-days, on average, the spread has decreased by 6 each day.
This trend following indicator is negative on the market
in the short term.
Market Internals are a decent trend-following analysis of
current market action, but in 2013 (so far), if I had been buying the positive
ratings and selling negative ratings I would have under-performed a buy-and-hold
strategy.
NTSM ANALYSIS
Overall, NTSM is neutral.
(I am mostly out of the market already.)
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 now under-performing my own system by about 6%!) 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.
