Michigan Sentiment…Personal Income…Personal Spending

MICHIGAN SENTIMENT UP (Briefing.com)
The University of Michigan Consumer Sentiment Index was revised up to 86.9 for the final October reading from 86.4 in the preliminary reading…Consumer sentiment has little influence on consumption.” Story at…
http://www.briefing.com/Investor/Calendars/Economic/Releases/mich.htm
 
PERSONAL INCOME UP; PERSONAL SPENDING DOWN (Briefing.com)
“Personal income increased 0.2% in September; down from a 0.3% increase in August…Personal spending declined 0.2% in September …Without a sizable acceleration in income growth, sustainable consumption growth will be difficult.” Story at…
http://www.briefing.com/Investor/Calendars/Economic/Releases/income.htm
 
THE BEARS ARE IN HIBERNATION FOR GOOD (CNBC)
The Federal Reserve has handed the ball off to the market after ending its bond-buying program, "and the market is taking the ball and running," Michael Crofton, president and CEO of Philadelphia Trust Company, told CNBC's "Closing Bell." "The bears are now back in hibernation for good," he added.” Story at…
http://www.cnbc.com/id/102138778?trknav=homestack:topnews:9
My Cmt:  Uh-oh.  That sounds an awful lot like: “Stock prices have reached what looks like a permanently high plateau." - Irving Fisher October 21, 1929

 

BUY THE RUMOR; SELL THE NEWS

That could be what is going on this week with an expectation that Republicans will take the Senate.  In theory, that will be good for Corporate Tax reform.  Selling the news means markets may drop (some) after the election.  We’ll see.
 
RELATIVE STRENGTH INDEX (RSI)
RSI is now up to 83 and that is oversold. It suggests a pullback of some sort (usually small) is overdue.
 
SMART MONEY
There has been late day selling over the last 10-days as traders take profits.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 63% at the close Friday.  (A number above 50% is usually good news for the markets.) New-highs outpaced New-lows Friday.  The spread (new-highs minus new-lows) was +144. (It was +136 Wednesday). The 10-day moving average of change in the spread was +26. In other words, over the last 10-days, on average, the spread has increased by 26 each day. Internals remained neutral on the market, because the smoothed 10-dMA of up-volume is falling.

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 long-term NTSM system analysis switched to BUY Friday.  Price and Volume indicators are positive. Others indicators are neutral.
 

MY INVESTED STOCK POSITION                                         

I moved some funds back into the market on 17 October 2014 as a trade and increased my position in stocks from 30% to about 40% overall.  I added more 20 Oct, to bring my stock investments up to 50%. I am semi-retired, 50% is Fully-invested for me.
                            --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY
The chart looks good and oil prices are close to a bottom so I think Ensco is again a Buy. See related video on this page…
http://finance.yahoo.com/q?s=esv&ql=1

Jobless Claims…GDP Up...National Debt Up

JOBLESS CLAIMS RISE (Reuters)
“The number of Americans filing new claims for unemployment benefits rose for a second straight week last week, but remained at levels consistent with a firming labor market. Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 287,000 for the week ended Oct. 25…” Story at…
http://www.reuters.com/article/2014/10/30/us-usa-economy-unemployment-idUSKBN0IJ1GY20141030
 
GDP UP 3.5% IN 3^RD QUARTER (Bloomberg)
“The economy in the U.S. expanded more than forecast in the third quarter, capping its strongest six months in more than a decade…Gross domestic product grew at a 3.5 percent annualized rate in the three months ended September after a 4.6 percent gain in the second quarter…” Story at...
http://www.bloomberg.com/news/2014-10-30/economy-in-u-s-grew-3-5-in-third-quarter-more-than-forecast.html
 
NATIONAL DEBT
Unfortunately, a lot of the gain in GDP was due to Government spending increases. The National debt is now roughly 18-trillion dollars or about 60,000 for every citizen. For every person paying taxes (including those who only pay into social security thru payroll taxes) this works out to be about 150,000 per person (17T/122M).  If only income taxpayers are included, it is about 210,000 each (17T/85M). Why is this worrisome?
 
“..the U.S. government borrows about 42 cents of every dollar it spends. And approximately $1 out of every $4 dollars that it borrows goes to pay just the interest on the national debt. (http://www.debt.org/government/) As interest rates rise, servicing the debt will become a greater drag on the economy and will eventually squeeze out other spending.  This is a coming crisis.  I have no clue about when, but neither the Tax-and-spend Democrats, nor the Cut-Tax-and-Spend Republicans seem to have a clue about avoiding it. 
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 63% at the close Thursday.  (A number above 50% is usually good news for the markets.) New-highs outpaced New-lows Thursday.  The spread (new-highs minus new-lows) was +144. (It was +136 Wednesday). The 10-day moving average of change in the spread was +26. In other words, over the last 10-days, on average, the spread has increased by 26 each day. Internals remained neutral on the market, because the smoothed 10-dMA of up-volume is falling.

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 long-term NTSM system analysis dropped to HOLD Thursday.  Volume indicator is positive. Others indicators are neutral. 
MY INVESTED STOCK POSITION                                         
I moved some funds back into the market on Friday, 17 October 2014 as a trade and increased my position in stocks from 30% to about 40% overall.  I added more Monday, 20 Oct, to bring my stock investments up to 50%. This move was based on my comments 16 Oct that a Tradable bottom had been set.  It appears that this will be a durable bottom and not just a trade.  Either way, since I am semi-retired, 50% is Fully-invested for me.
                     --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY?
The chart looks good and oil prices are close to a bottom so I think Ensco is again a Buy. See related video on this page…
http://finance.yahoo.com/q?s=esv&ql=1
Discussion on oil prices on CNBC were all over the place Monday, from $80 to $65.  It reminds me of 2007 when there were experts on CNBC predicting $10/gallon gas. 
BARRONS ON ENSCO
“Ensco reported adjusted EPS of $1.87 in the quarter, above our $1.67 estimate and consensus of $1.61. The beat was driven by both higher-than-expected revenues as the company likely earned more bonus payments than anticipated. Lower-than-expected costs also contributed, as the company was successful in containing cost inflation in the quarter.” From…
http://blogs.barrons.com/stockstowatchtoday/2014/10/30/ensco-noble-buck-offshore-driller-weakness-as-earnings-surprise-to-the-upside/?mod=yahoobarrons&ru=yahoo

FOMC Meeting (The FED) - QE Ended

QE OVER (CNBC)

FED issued a “quite bullish” statement.  The statement is much more positive on the US economy than prior statements.  It was deemed “hawkish” because the better economic news might cause them to raise rates sooner, but after an initial decline, markets rebounded and finished higher. For a video and statement analysis, see…

http://www.cnbc.com/id/102132620?trknav=homestack:topnews:1
 
MARKET REPORT
Wednesday, the S&P 500 was down about 0.1% to 1982 (rounded). 
VIX was up about 5% to 15.15. 
The yield on the 10-year Treasury Note rose to 2.32%.
 
Late day buying has been the rule for a while and that is bullish for stocks.
RSI is neutral at 63.  70 is overbought.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 63% at the close Wednesday.  (A number above 50% is usually good news for the markets.) New-highs outpaced New-lows Wednesday.  The spread (new-highs minus new-lows) was +136. (It was +154 Tuesday). The 10-day moving average of change in the spread was +71. In other words, over the last 10-days, on average, the spread has increased by 71 each day. Internals switched to neutral on the market, because the smoothed 10-dMA of up-volume is falling.

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 long-term NTSM system analysis is BUY.  Volume and Price indicators are positive. It doesn’t matter at this point, because I called a BUY on 17 October based on Technical analysis.

MY INVESTED STOCK POSITION                                         

I moved some funds back into the market on Friday, 17 October 2014 as a trade and increased my position in stocks from 30% to about 40% overall.  I added more Monday, 20 Oct, to bring my stock investments up to 50%. This move was based on my comments 16 Oct that a Tradable bottom had been set.  It appears that this will be a durable bottom and not just a trade.  Either way, since I am semi-retired, 50% is Fully-invested for me.
                            --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY?
The chart looks good and oil prices are close to a bottom so I think Ensco is again a Buy. See related video on this page…
http://finance.yahoo.com/q?s=esv&ql=1
Discussion on oil prices on CNBC were all over the place Monday, from $80 to $65.  It reminds me of 2007 when there were experts on CNBC predicting $10/gallon gas.