“Nonfarm payrolls increased by 288,000 jobs last month and the unemployment rate fell to 6.1 percent, its lowest level since September 2008…"It’s an extremely bullish report. It's a report that really checks off all the positive boxes…" said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.” Story at…
UNEMPLOYMENT CLAIMS (Briefing.com)
“The initial claims level increased to 315,000 for the
week ending June 28…continuing claims…increased to 2.579 mln…Claims data over
the past few weeks confirm a general improvement in labor market conditions.”
Charts and commentary at…https://www.briefing.com/Investor/Calendars/Economic/Releases/claims.htm
MARKET REPORT
Thursday, the S&P 500 was
up 0.5% to 1985 (rounded). Volume was low due to shortened trading ahead of the Holiday.
VIX fell about 5% to 10.32. Falling VIX is good, but VIX this low is a red-flag and shows extreme complacency. This is a precursor to correction, but not necessarily helpful in the exact timing. VIX below 10? That’s what happened in 2000.
The yield on the 10-year Treasury Note was up to 2.64% at
the close. The Bond Ghouls may be warming
to this late stock rally.
CORRECTION WATCH – CLUES BOTH WAYS
-No Correction: The Percentage of Stocks above their
200-dMA was 69% Wednesday (data is a day late); 61% is the trouble point for
that stat. The S&P 500 is 8.5% above
the 200-dMA and 10% above the 200-day is the trouble point for that one.
Sentiment is 80%-bulls and this indicator will switch to negative at 83%. VIX was falling today, so the options boys
didn’t seem worried.
-Correction Now: RSI rose slightly to an Overbought 81.
(70 is overbought). Chart wise, the index is at the top of the 3-month chart
upper trend line and that is often a point where there are reversals. It is
also near the top of the 1-year chart upper trend line. It could continue to
crawl upward along that trend line so further advance can’t be ruled out. While falling VIX is usually good, a VIX this
low often precedes a correction. Statistically,
the index is too “quiet” (as it has been since mid-May) and a pullback is
suggested by that stat too. The
Internals are getting more negative even as the Index advances.
While there are some indications of a pullback now, I’d
like to see the Index get a bit higher before I’d take a short position. The shorts have been killed in this market.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) remained 55% at the close Thursday. (A number above 50% for the 10-day average is
generally good news for the market.) New-highs outpaced New-lows Thursday. The spread (new-highs minus new-lows) was +171.
(It was +156 Wednesday.) The 10-day moving average of change in the spread fell
to minus-8. In other words, over the last 10-days, on
average, the spread has DECREASED by 8 each day. The smoothed 10-dMA of up-volume
was DOWN today and the Internals remained neutral on the market. Only the 10-dMA of percentage of stocks
advancing kept the internals from flashing a negative.
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 analytical model for LONG-TERM MONEY remained
HOLD Thursday. Sentiment remained 80%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Tuesday (data is a day late). (83% is the negative level
for the Sentiment indicator.) This value was 85%-bulls on 19 May. Sentiment, Volume
& VIX indicators are all neutral. The Price indicator remains positive
because up-moves have been larger than down-moves recently.
MY INVESTED POSITION
I increased my stock allocation to 50% invested in stocks
on 26 March because of the NTSM indicators turned positive 24 Mar at the
close. 50% in stocks is fully invested
for me, given my age (semi-retired) and the risk inherent in today’s stock market.
I am watching closely to see if it is time to reduce my long-term stock
holdings.--INDIVIDUAL STOCKS--
ENSCO (ESV): HOLD (Earnings announce 28 July)
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.htmlEnsco has surpassed the mean and median analyst price targets. As of Monday it is 55.57 so time to get more cautious.
