ISM Services…FED Beige Book…ADP Jobs Report

ISM NON-MANUFACTURING FALLS (Briefing.com)
“The ISM Non-Manufacturing Index fell to 51.6 in February from 54.0 in January. That was the weakest print since February 2010….Not surprisingly, many sectors reported that extreme winter weather conditions wreaked havoc on business activity in February.  The evidence in the hard data, however, suggests a cyclical slowdown is more likely taking place…The Employment Index fell a whopping 8.9 points to 47.5 in February from 56.4 in January. That ended a 25-month expansion cycle.”  Full story and charts at…
http://www.briefing.com/Investor/Calendars/Economic/Releases/napmserv.htm
At 51.6, the Index still indicates expansion, albeit a lot slower than the previous month.  At 47.5, the employment index in the ISM is declining.
 
FED BEIGE BOOK – IT’S THE WEATHER STUPID (Business Insider)
“Reports from most of the twelve Federal Reserve Districts indicated that economic conditions continued to expand from January to early February. Eight Districts reported improved levels of activity, but in most cases the increases were characterized as modest to moderate. New York and Philadelphia experienced a slight decline in activity, which was mostly attributed to the unusually severe weather experienced in those regions. Growth slowed in Chicago, and Kansas City reported that conditions remained stable during the reporting period. The outlook among most Districts remained optimistic.”  Full story at...

http://www.businessinsider.com/federal-reserve-beige-book-march-2014-3?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+clusterstock+(ClusterStock)

 
ADP JOBS REPORT – IT’S THE WEATHER STUPID (USA TODAY)
“Businesses added 139,000 jobs in February, private payroll processor ADP said Wednesday, adding to concerns that the labor market continued to struggle last month amid extreme winter weather. Economists expected ADP to report 158,000 additional private-sector jobs, according to a consensus forecast.” Full story at…
http://www.usatoday.com/story/money/business/2014/03/05/february-adp-report/6026649/
 
MARKET REPORT

Wednesday, the S&P 500 was unchanged at 1874 (rounded). 

VIX down about 1% to 13.93.
The yield on the 10-year Treasury Note fell slightly to 2.69%. 

The S&P 500 is now 8.3% above the 200-day moving average (200-dMA).  We have seen small downturns begin fairly regularly when the Index climbed to about 10% above the 200-dMA.  The most recent decline began at exactly 10% above the 200-dMA on 31 Dec.   My earlier guestimate was for a correction in the first quarter.  That is looking less likely now that the recent small downturn didn’t amount to much.   Still, it looks like investors are chasing this market now and perhaps the long awaited correction isn’t too far behind.  How’s that for a waffling non-prediction? 
 
MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing rose to 59% at the close.  (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-highs minus new-lows) at +171.  (It was +282 Tuesday). The 10-day moving average of change in the spread was +3. In other words, over the last 10-days, on average, the spread has increased by 3 each day. The internals remain 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 2013, using these internals alone would have made a 16% return vs. 30% for the S&P 500 (in on Positive out on Negative – no shorting).  Of course, few trend-following systems will do well in an extreme low-volatility, straight-up year like 2013.
 
NTSM

The NTSM system remained HOLD today, Wednesday. The most recent Buy signal was 28 Feb, although I’ve adjusted the Buy override (5-10-20 Timer + Market Internals).  With the adjustments included, the Buy would have been 13 Feb. 

MY INVESTED POSITION

I am about 50% invested in stocks because I upped my stock holdings by 10% on Friday, 28 Feb.  That’s fully invested for me at least as far as long term money goes.  This is a suitable stock allocation for a balanced portfolio.  Since bonds are yielding very little now, I will consider adding more to stocks later in the month or sooner if there is a significant buying opportunity.