Stocks Follow Oil Down

S&P 500 FOLLOWS OIL DOWN (Yahoo Finance)

“A sharp drop in crude prices tugged down shares in oil and gas companies on Friday, leading the Standard & Poor's 500 index to a slight loss in a short trading session.”

http://finance.yahoo.com/news/asian-energy-shares-slide-opec-052912113.html
Seems reasonable to me, but I don’t know why.  In the long run, falling oil prices should be good for the economy unless one lives in oil country (Texas, Oklahoma, North Dakota, etc.)
 
MARKET REPORT
Friday, the S&P 500 was down about 0.25% to 2068 (rounded). 
VIX was up about 10% to 13.33.  I am surprised by the size of this up move since it shows a sudden concern by the options market.
The yield on the 10-year Treasury Note fell again to 2.16, so the Bond Ghouls remain worried.
 
Between the VIX and Bond Market it makes one wonder whether all those bears might be right.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 54% 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 +141. (It was +150 Wednesday).  The 10-day moving average of change in the spread was +3. In other words, over the last 10-days, on average, the spread has increased by 3-each day. Internals switched to neutral 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 long-term NTSM system analysis switched to HOLD Friday. Only the Price indicator remains positive.  Others 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. I remain 50% invested in stocks.
                            --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): HOLD
It certainly looks like the oils and oils services made a bottom today. Ensco price is going to reflect oil prices.  If you think they are near a bottom, this is a great buy with high dividends. If not; it’s a dog. I’m tempted to sell after today’s rout (ESV was down 9%.), but I’d like to watch this for a while. I’ve already taken a beating and it can’t get too much worse. 
ENSCO ANALYSIS FROM THE STREET.COM
http://www.thestreet.com/story/12968993/1/ensco-esv-stock-hits-52-week-low-as-oil-prices-hit-four-year-low.html?puc=yahoo&cm_ven=YAHOO

Jobless Claims Rise…Durable Goods Orders Weak…Consumer Spending Higher…VIX Remains too Low

JOBLESS CLAIMS (USA Today)
“Initial claims for unemployment benefits rose last week, but continue to hover below pre-recession levels, the Labor Department said Wednesday. First-time claims were up 21,000 to a seasonally adjusted 313,000, the highest since early September.” Story at…
http://www.usatoday.com/story/money/business/2014/11/26/weekly-jobless-claims/70123574/
 
DURABLE GOODS ORDERS WEAK (Marketwatch)
“Aside from a huge bump in military aircraft contracts, orders for durable goods were surprisingly weak in October for the second straight month, an ominous sign that might suggest U.S. business investment is slowing.” Story at…
http://www.marketwatch.com/story/durable-goods-report-has-weak-tone-in-october-2014-11-26
 
CONSUMER SPENDING MODESTLY HIGHER (WSJ)
“U.S. consumer spending picked up in October, though the modest pace suggests that American households remain cautious heading into the holiday shopping season. Personal spending, which measures outlays for everything from clothing to home heating, rose a seasonally adjusted 0.2% from the prior month…In the third quarter of the year, consumer spending grew at a 2.2% annual pace, down from 2.5% in the second quarter.” Story at…
http://online.wsj.com/articles/u-s-consumer-spending-up-0-2-in-october-1417009731
 
STAY BULLISH – TOM LEE (CNBC)
"’I think everybody who's really following markets has to be careful just not to get bear traps,’ Lee, founder of Fundstrat Global Advisors, said in an interview with "Squawk on the Street.”  The narrative this year is the U.S. economy has shown a lot of resilience. It is going to benefit from lower oil. The weakness in Europe and Asia haven't really damaged the U.S. economy.’ In other words, stay bullish, the noted bull said. " Story at...
http://www.cnbc.com/id/102220317?__source=yahoo%7cfinance%7cheadline%7cheadline%7cstory&par=yahoo&doc=102220317
 
VIX REMAINS ALMOST TOO LOW
VIX has dropped to 12.07.  Below 12 has been a trouble point for stocks in 2013 and 2014. This is a counter-intuitive indicator since a falling VIX is generally good for stocks. “Trouble” is relative here.  Don’t expect more than a 5% pullback based on recent history.
 
SENTIMENT
I measure Sentiment as %-Bulls calculated from the 5-dMA of "Bulls/(Bulls+Bears)" based on funds invested in selected Rydex/Guggenheim funds. Sentiment rose to 82% Wednesday. My sell point for this indicator is 83% based on a multiple of standard deviations similar during past extremes. That value is roughly 6-Bulls for every Bear.  That isn’t all though.  Other sets of long short funds show even larger extremes.
 
96% of investors are bullish in 2 long/short Nasdaq Rydex funds not included in my indicator and that again is a 5-dMA.  That isn’t just high - it is almost beyond belief since it means that Bulls outnumber bears 25 to 1.  The bottom line here is that it suggests trouble ahead for the markets if this stat doesn’t turn around.
 
MARKET REPORT
Wednesday, the S&P 500 was up about 0.3% to 2073 (rounded). 
VIX was down about 1.5% to 12.07. 
The yield on the 10-year Treasury Note fell again to 2.24, so the Bond Ghouls remain worried.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 54% 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 +150. (It was +163 Tuesday).  The 10-day moving average of change in the spread was +6. In other words, over the last 10-days, on average, the spread has increased by 6-each day. Internals remained positive 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 long-term NTSM system analysis remained to BUY Wednesday.  Both VIX and Price indicators are positive.  Others are neutral.  The Buy rating is not particularly important now because a BUY call was made on 17 Oct. at the recent bottom.

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. I remain 50% invested in stocks.
                            --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. ESV got slammed today on 2-points: (1) Seadrill canceled its dividend today, so there is fear that other oil services companies will too.  Of the drillers who might, ESV was notably absent from the list I saw. (2) OPEC is not cutting production so drillers may be under further pressure.
 
ENSCO BUYING OPPORTUNITY (Seeking Alpha)
“After the retreat in its price, it is now an excellent opportunity for a long-term investment in ESV's stock at a cheap price.

Ensco will benefit from a more modern and efficient fleet, and its massive $11 billion of contracted revenue backlog will guarantee the continuous success of the company. ESV’s forward annual dividend yield is extremely high at 7.52%, and the annual rate of dividend growth over the past three years was also very high at 27.7%.” Commentary at…

http://seekingalpha.com/article/2706035-ensco-a-buying-opportunity-in-a-high-yielding-stock?uprof=44&dr=1
Ensco price is going to reflect oil prices.  If you think they are near a bottom, this is a great buy with high dividends. If not; it’s a dog.

GDP…Consumer Confidence Dissapoints…Holidays Are Good for Stocks…VIX is too Low

GDP UP 3.9% (Bloomberg)

"Gross domestic product, the value of all goods and services produced, rose at a 3.9 percent annualized rate, up from an initial estimate of 3.5 percent…'We probably have more momentum heading into the final quarter of the year,' said Brian Jones, a senior U.S. economist at Societe Generale in New York…” Story at…

http://www.bloomberg.com/news/2014-11-25/economy-in-u-s-expands-3-9-more-than-previously-forecast-1-.html

CONSUMER CONFIDENCE (Briefing.com)

“The Conference Board’s Consumer Confidence Index dropped to 88.7 in November from a downwardly revised 94.1 (from 94.5) in October. The Briefing.com consensus expected the index to increase to 96.0. The sharp decline in confidence was very unusual. Typically, confidence levels follow trends in employment, stock prices, and gasoline prices.” Charts and commentary at...
http://www.briefing.com/Investor/Calendars/Economic/Releases/conf.htm
 
THANKSGIVING FORECAST (MarketWatch)
“There’s good news, bullish investors, because the odds are in your favor for the rest of this week and all of next.” – Mark Hulbert. Commentary at…
http://www.marketwatch.com/story/how-the-stock-market-behaves-before-and-after-thanksgiving-2014-11-24
 
VIX IS ALMOST TOO LOW
VIX has dropped to 12.25.  Below 12 has been a trouble point for stocks in 2013 and 2014. This is a counter-intuitive indicator since a falling VIX is generally good for stocks.
 
MARKET REPORT
Tuesday, the S&P 500 was down about 0.1% to 2067  (rounded). 
VIX was down about 3% to 12.25. 
The yield on the 10-year Treasury Note fell to 2.26 so the Bond Ghouls remain worried.
 
Advancing issues handily outpaced decliners and Tick was positive so Wednesday is likely to be an up day.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 53% at the close Tuesday.  (A number above 50% is usually good news for the markets.) New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +163. (It was +138 Monday).  The 10-day moving average of change in the spread was +1. In other words, over the last 10-days, on average, the spread has increased by1-each day. Internals switched to positive on the market since the 10-day change in daily spread is declining.

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 Tuesday because VIX has been falling.  Both VIX and Price indicators are positive.  Others are neutral.  The Buy rating is not particularly important now because a BUY call was made on 17 Oct. at the recent bottom.

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. I remain 50% invested in stocks.
                            --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
Ensco price is going to reflect oil prices.  If you think they are near a bottom, this is a great buy with high dividends. If not; it’s a dog.