“Employers in the U.S. added more than 200,000 jobs for a sixth straight month in July, the longest such period since 1997 and a sign of optimism about the economic outlook. The jobless rate climbed to 6.2 percent as more people entered the labor force. The 209,000 advance followed a 298,000 gain in June that was stronger than previously reported, figures from the Labor Department showed today in Washington.” Story at…
http://www.bloomberg.com/news/2014-08-01/payrolls-in-u-s-rose-209-000-in-july-unemployment-rate-at-6-2-.html
The expectation was for a number around 230,000.
NOTE FROM FxPRO (CNBC)
“Worse than expected nonfarm
payrolls do little to allay concerns over interest rates, says Angus Campbell, senior analyst at FxPro, in a note.
‘Today’s nonfarm payroll has come in at 209k and the
unemployment rate increased to 6.2%, but more importantly, the average hourly
earnings did not increase as much
as was expected staying flat at 0.0%. This is a key metric watched by the US’s Federal Reserve and it comes as little
surprise to see the dollar giving
back some of its gains from recent days…’” Comment at…
http://www.cnbc.com/id/101885952
DON’T GET CAUGHT IN THE CROWD (CONTROL, CONTROL. YOU MUST LEARN CONTROL -
YODA) (Yahoo Finance)
“I can't tell you specifics on how to play this
[pullback] but I can tell you how I avoided getting wiped out in 2000 and 2008.
I simply stepped out of the crowd. This isn't a time for over thinking. It's a
time for taking a measure of your emotions. If you're scared now you'll be more
frightened later. Control your risk. If you didn't sleep last night you're too
long stocks. If you're afraid of your [reading your mutual fund] statements
it's because a little voice in your head knows you're taking too much risk. Get
in front of that emotion before it reduces your intellect to that of the
masses. Buckle up and look for opportunities. There are times for bravery and
times to simply buckle up. History suggests the selling will end when we're all
good and scared. We're not there yet but we will be, most likely sooner than
you think.” - Jeff Macke. Commentary at…
http://finance.yahoo.com/news/macke--don-t-get-caught-in-the-crowd-as-fear-builds-121813063.html
MARKET REPORT
Friday, the S&P 500 was
DOWN 0.3% to 1925 (rounded).
VIX rose about 0.5% to 17.03. The yield on the 10-year Treasury Note rose slightly to 2.49% at the close; the bond Ghouls woke up and got worried.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) fell to 42% at the close Friday. (A number below 50% for the 10-day average is
generally BAD news for the market and the average in a normally rising market
is 53%.)
New-lows outpaced New-highs Friday. The spread (new-highs minus new-lows) was minus-86
(It was minus-75 Thursday.) The 10-day moving average of change in the spread
fell to minus -19. In other words, over
the last 10-days, on average, the spread has DECREASED by 19 each day. The
smoothed 10-dMA of up-volume was DOWN today and the Internals remained negative
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 analytical model for LONG-TERM MONEY remaned
SELL Friday.
Indicators are as follows:
SENTIMENT: Sentiment remained neutral, but rose to 78%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Wednesday (data is a day late). (84% is the current
negative level for the Sentiment indicator.) Sentiment was 85%-bulls on 19 May.
While officially neutral, a Sentiment of 77%-bulls (3 out of every 4 investors
betting long) is extremely high so I could easily call it negative.
The volume indicator turned negative today so PRICE,
VOLUME and VIX indicators are now all negative.
I am usually more confident of a correct call when all of the indicators
flash “Sell” as they did today. (I am
counting Sentiment as a sell for this tally.
Even without sentiment, the NTSM system is clearly in the SELL camp.)
NTSM remains SELL.
MY INVESTED POSITION
I reduced my investment in stocks to 30% on 1 August because of the NTSM indicators turned negative at the close on 31 July. 30% invested protects the portfolio. If there is a 50% crash I would only lose 15% of the portfolio value. At the same time, if the market goes up, I will make some gains. No system is perfect and the NTSM system has underperformed a buy and hold strategy in the Fed driven market currently in place.
--INDIVIDUAL STOCKS--
ENSCO (ESV): HOLD (Earnings announce 31 July)
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
I like the dividend. With a PE of 8.5, ESV has limited downside in any pullback that may occur.
