“U.S. payrolls grew modestly while the unemployment rate fell in October, readings that mark the longest stretch of consistent job creation since World War II but come only days after voters signaled unease about the breadth of the recovery. Nonfarm payrolls grew a seasonally adjusted 214,000 last month, the Labor Department said Friday.” Story at…
http://online.wsj.com/articles/jobs-report-economy-adds-214000-jobs-1415367269
SENTIMENT AT HIGHEST LEVEL OF 2014 (Marketwatch)
“At current levels, optimism is unusually high and pessimism is unusually low, AAII wrote, in a report accompanying its survey results, adding that “historically, such occurrences have been followed by lower-than-average levels of market gains.” Story at...
http://www.marketwatch.com/story/buyer-beware-investor-sentiment-at-highest-level-of-2014-2014-11-06?dist=afterbell
My cmt: I saw several pieces on high sentiment and how this is dangerous for the markets. It usually is, but not immediately after corrections. After a correction (like the one we just completed) everyone is betting long. That is the one time when the herd is usually right. My sentiment readings have been falling so that is good news for the bulls.
INTERESTING PATTERN
If you believe in stock market patterns, today’s pattern at the S&P 500 high is very similar to the new high in mid-September a year ago. At that point, the market had experienced two quick bottoms (as it has recently), but in 2013 it didn’t end there. In 2013, the S&P 500 made another quick trip back to the lower trend line (about a 5% drop) and then finished the year very strong. If that pattern repeats, the S&P 500 could fall back to about 1980. In 2013, the VIX was 13.59 very close to today’s value of 13.12. So the “fear level is about the same. Time for a repeat? Only time will tell. I wouldn’t trade that sort of speculation.
RSI
Today’s RSI (14-dSMA) was 86 and that remains an overbought value that is quite high. This probably indicates some pullback of the S&P 500 is coming, but it may be just a return to the lower trend line. I don’t expect much since the Index just completed a correction.
MARKET REPORT
Friday, the S&P 500 was basically unchanged at 2032 (rounded).
VIX was down about 4% to 13.12.
The yield on the 10-year Treasury Note fell to 2.30% on the payroll report that showed less hiring than expected.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 58% 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 +136. (It was +107 Thursday). The 10-day moving average of change in the spread was +8. In other words, over the last 10-days, on average, the spread has increased by 8 each day. Internals switched to 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 remains BUY Friday. Price and Volume indicators are positive. Others indicators are neutral. This buy signal is not important now since a BUY signal was issued near the recent low in mid-October.
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. ESV is up 12% since 13 Oct.
