Jobless Claims Up…US Durable Goods Orders Fall…Russia May Seize Property…Finally, just maybe; a pullback??

JOBLESS CLAIMS UP, BUT LESS THAN EXPECTED (Reuters)
“The number of Americans filing new claims for unemployment benefits rose less than expected last week, suggesting an acceleration in job growth in September. Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 293,000 for the week ended Sept.20, the Labor Department said on Thursday.” Story at…
http://www.reuters.com/article/2014/09/25/us-economy-jobless-idUSKCN0HK1E420140925

DURABLE GOODS ORDERS FALL (WSJ)

“Orders for long-lasting manufactured goods tumbled last month as aircraft purchases pulled back from July's record high…New orders for durable goods—products such as refrigerators and cars that are designed to last at least three years—plunged 18.2% in August…excluding the volatile transportation category, orders rose 0.7% in August after falling 0.5% the prior month.” Story at…
http://online.wsj.com/articles/u-s-durable-goods-orders-fell-18-2-in-august-1411648278

RUSSIA PREPARES TO SEIZE FOREIGN PROPERTY (Yahoo News)

“Russian courts could get the green light to seize foreign assets on Russian territory under a draft law intended as a response to Western sanctions over the Ukraine crisis.” Story at…
http://news.yahoo.com/russian-draft-law-allow-seizure-foreign-property-124247659--business.html

TODAY

The markets broke down finally tracking the smaller cap stocks that have been under pressure for some time.  The divergence between the large and small caps has been evident in the falling breadth on the NYSE as indicated in the chart below.  Then too, the number of stocks below their 200-dMA has been impressively large.  I’ve pointed out both of these stats recently.  With the small stocks falling, sooner or later the large caps tend to fall too, so we have days like today.

STATISTICALLY SIGNIFICANT DAYS - PULLBACK

Thursday was statistically-significant in my system because the size of today’s move was larger than the recent normal as measured by standard deviation from the norm.  That implies Friday would be an up-day about 62% of the time.  Over the last 3-weeks there have been 9-statistically significant days.  I’ve looked at this stat all the way back to 2008 and I couldn’t find as many statistically significant days over any 3-week period.  I think this just shows confusion by investors and that is often what happens at a top.  Everyone is trying to figure out which way the market will go.  Based on recent history, one might guess that the market could experience a small pullback of around 5% top to bottom.  The big divergence in breadth, stocks below their 200-dMA and market internals turning down hint (once again) at the ever elusive 10-20% correction.

 

Looking at the number of days since the top and size of today’s move, the evidence is strong that the bottom is not in.

 

MARKET REPORT

Thursday, the S&P 500 was DOWN about 1.6% to 1966 (rounded).
VIX was UP about 18% to 15.64.
The yield on the 10-year Treasury Note fell to 2.5% at the close.

 

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 40% at the close Thursday.  New-lows outpaced New-highs Thursday.  The spread (new-highs minus new-lows) was minus-174. (It was -102 Wednesday). 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 by 17 each day. Internals switched to negative today.
 

 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

Thursday, the NTSM is HOLD.  Indicators are neutral, but trending toward sell. 

MY INVESTED STOCK POSITION

I made a BUY call on Monday, 18 August 2014 because the charts were looking better; therefore, I upped my invested percentage to 50% invested in stocks on Tuesday 19 August.  The 5-10-20 Timer and Market Internals both gave positive signals on 19 August confirming the previous day’s Buy signal. 50% is Fully invested for me since I am semi-retired.
                            --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
ENSCO’s chart doesn’t look good now since it has fallen below prior lows as the oil drillers have not performed well.  On the plus side, dividend is 6%. PE is 8.5 so downside is somewhat limited.
TOO CHEAP TO IGNORE (Forbes)
“Ensco has a strong buy rating according to ValuEngine and is 19.6% undervalued with a one-year price target at $50.25.” – Story at…
http://www.forbes.com/sites/investor/2014/09/22/transocean-and-three-other-energy-stocks-too-cheap-to-ignore/?partner=yahootix