ADP EMPLOYMENT REPORT - 238,000 JOBS ADDED
The labor market ended 2013 on a roll, with businesses
continuing a several-month streak of solid payroll gains by adding 238,000 jobs
in December, payroll processor ADP said Wednesday. Economists expected ADP to report 200,000
additional private-sector jobs…"Job gains are broad-based across
industries, most notably in construction and manufacturing," said Mark
Zandi, chief economist of Moody's Analytics, which helps ADP compile the
report. "It appears that businesses are growing more confident and
increasing their hiring." Full story at…
10% CORRECTION COMING AND GOLD GOING DOWN (CNBC)
“Nuveen's Bob Doll sees a 10 percent stock correction amid
a pretty good but volatile year for stocks, and he expects gold and other
commodities to continue to fall. Doll, chief equity strategist at Nuveen Asset
Management, also sees the economy growing at a 3 percent pace and the 10-year Treasury yield topping out at
about 3.5 percent in 2014, while the Federal Reserve
continues to hold short-term rates near zero. It should become clear by the end
of the year that inflation has bottomed, but it will not be a factor to help
gold out of its slump in 2014.” Full story and video at…
FED TO CONTINUE CUTTING QE AT A STEADY PACE (Reuters)
“Two top Federal Reserve officials said on Tuesday they
expected the U.S. central bank to reduce its stimulus at a steady pace, with
the lone official to dissent against the Fed's decision to trim its bond buying
saying he was comfortable with the approach…"I'm comfortable with the
current approach that it looks like we're going to be following through
on," he [Boston Fed President Eric Rosengren, who voted against the Fed's
decision last month to reduce its monthly bond buying] said after giving a
speech to an economic forum in Hartford.
San Francisco Fed President John Williams, speaking in Phoenix, Ariz.,
said the central bank was likely to continue to cut its asset purchase program
at a "steady, measured" pace in coming meetings.” Full story at…
FED MINUTES CONFIRMED “MEASURED STEPS” BUT DEPENDS ON OUTLOOK (CNBC)
"The Open Markets Committee voted to cut the purchases
from $85 billion to $75 billion a month, but gave no indication that a future
course is preset. "Many members judged that the committee should proceed
cautiously in taking its first action to reduce the pace of asset purchases and
should indicate that further reductions would be undertaken in measured
steps," the minutes said…”
“…Members also stressed the need to underscore that the
pace of asset purchases was not on a preset course and would remain contingent
on the committee's outlook for the labor market and inflation as well as its
assessment of the efficacy and costs of purchases." Full story at…
UNEMPLOYMENT INSURANCE
While politicians discuss extending long-term unemployment insurance, I
thought it might be interesting to see how many job openings there are as of 10
December 2013. The answer is: A little
less than 4-million job openings. That is about the same as January of
2005. The number employed was about the
same too. There was no extended
unemployment insurance in January of 2005; it was extended in 2008. So what’s the difference between
now and January 2005? Other than
politics, not much.
Source: Bureau of Labor Statistics, Current Employment
Statistics and Job Openings and Labor Turnover Survey, December 10, 2013.
Note: Shaded area represents recession as determined by
the National Bureau of Economic Research (NBER). Chart and additional data
available at…
MARKET REPORT
Wednesday, the S&P 500 was down 1pt to 1837 (rounded).
VIX was down about 0.4% to 12.87.
The 10-year Treasury Note closed at 2.99% yield. As
explained by Art Cashin, UBS Director of Floor Trading on the NYSE and CNBC
commentator, rates at 3% or above are considered by some traders to be
“trouble-for-stocks”.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing fell to 54%
at the close Wednesday. (A number above 50%
for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Wednesday, leaving
the spread (new-hi minus new-low) at +142 (it was +125 Tuesday). The 10-day moving average of change in the
spread fell to minus 17. In other words, over the last 10-days, on average, the
spread has decreased by17 each day. Only
Breadth remains positive; advancing volume and new-high/new-low data are
negative. Overall, market internals
remained neutral on the market, but are trending down.
Market Internals are a decent trend-following analysis of
current market action, but in 2013, if I had been buying the positive ratings
and selling negative ratings I would have under-performed a buy-and-hold
strategy.
NTSM
The S&P 500 was 10.1% above the 200-dMA at the close
Tuesday a week ago and a value of 10% has led to small pullbacks in 2013 (and
corrections in 2011 and 2012).
Sentiment is screaming high at 81%-bulls (5-dMA of
selected Rydex/Guggenheom funds); Price is positive since up days have been
larger than down days over the past month; VIX and Volume are neutral. The most recent BUY signal for the NTSM system was 25
October. The “5-10-20 Timer” switched to
BUY from HOLD on 18 December.
MY INVESTED POSITION
I am about 30% invested in stocks as of 20 December
(S&P 500-1540) because I upped my stock holdings by 10% on the 20th
of December. Unless I get a SELL signal
in the NTSM system, I will continue to income-average (a little each month)
into the stocks to get my %-invested up to around 50% (max for me now) unless
there is a correction that would allow me to move in sooner and at a higher
percentage. Since that is my expectation, I have not upped my invested
percentage in one move as I normally would.
(A good rule of thumb for percent invested is to subtract
your age from 100 and put that amount into the stock market. Generally a minimum of 50%-50% stocks and
other investment is a reasonable value for the over 50-crowd; that’s my
group. With bond yields rising keep to
the short end of bonds, i.e., less than 10-year maturity or mutual funds that
focus on the short end.)
