“Manufacturing cooled in September following the strongest rate of growth in three years as U.S. factories settled into a more sustainable expansion that will spur the economy. While the Institute for Supply Management’s index dropped to 56.6 from 59 in August, the gauge’s average over the past three months was the highest since early 2011…” Story at…
http://www.bloomberg.com/news/2014-10-01/manufacturing-in-u-s-cools-from-strongest-pace-in-three-years.html
ADP EMPLOYMENT UP (Forbes)
ADP’s September National Employment Report showed
private payrolls adding 213,000 jobs in the first month of fall. ADP — Automatic
Data Processing – CEO Carlos Rodriguez pointed out that
Septembers marks six months in a row of ADP measured job gains over 200,000. He
calls this a “positive sign for the economy.” Story at…http://www.forbes.com/sites/samanthasharf/2014/10/01/adp-says-private-sector-added-213k-jobs-in-september/
STATISTICAL ANALYSIS OF THE S&P 500 INDEX…
Even with today’s down move, the index remains surprisingly “calm”. VIX is not particularly high either. Further,
it is at its upper trend line where corrections have been ending in 2013 and
2014. VIX will need to break out higher to signal a correction.
CORRECTION SIGNS
The 50-day moving average (50-dMA) of the S&P 500 was 1976, so that
support level has failed. The 200-dMA is
1900 or about 1.5% below the current value.
If the market continues down, that will be a key point watched by
traders. If the 200-day fails it will be
more evidence of a significant correction. For all the angst on CNBC today, the
S&P 500 is only 3.2% below its all-time high.
THURSDAY GOES UP? CORRECTION OVER?
In the meantime Wednesday was a 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 Thursday would be an up-day about 62% of the time. It doesn’t feel like it, but some of the
numbers suggest to me that the S&P 500 may be near its bottom. I think it will go lower, but perhaps not by
much. The index is now at its lower
trend line and VIX isn’t showing much concern…yet.
MARKET REPORT
Wednesday, the S&P 500 was down about 1.3% to 1946 (rounded).
VIX was up only about 2.5% to 16.71.
The yield on the 10-year Treasury Note dropped to 2.39% as the Bond Ghouls showed some concern.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) fell to 40% at the close Wednesday.
New-lows outpaced New-highs Wednesday.
The spread (new-highs minus new-lows) was minus-232. (It was -150 Tuesday).
The 10-day moving average of change in the spread fell to minus-26. In other
words, over the last 10-days, on average, the spread has decreased by 26 each
day. Internals switched to negative today as up-volume fell.
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
Wednesday, the NTSM is HOLD. The NTSM indicators ar not too far from 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
Oil prices need to stabilize before the oil services companies recover.
