“The number of people who applied for U.S. unemployment benefits hit the lowest level in three weeks, as employers continued to lay off very few workers, according to government data released Thursday. Initial claims for regular state unemployment-insurance benefits inched down by 3,000 to 294,000 in the week that ended Dec. 6, the U.S. Labor Department reported.” Story at…
http://www.marketwatch.com/story/new-jobless-claims-is-lowest-in-three-weeks-2014-12-11
RETAIL SALES (Briefing.com)
“Retail sales increased 0.7% in November after increasing an upwardly revised 0.5% (from 0.3%) in October….Large income gains helped spark an acceleration in consumption growth.” For details and chart see…
http://www.briefing.com/Investor/Calendars/Economic/Releases/retail.htm
OIL BELOW $60 (Reuters/CNBC)
Story and Video here…
http://www.cnbc.com/id/102258403
OIL IS A BLACK SWAN (CNBC)
"What we've seen is something people have been talking about for two, three, five years and no one is talking about it now," said Birinyi, founder of Birinyi Associates. "It's just a black swan…A totally unpredictable event…Birinyi said the stock market will steady once it's gets more information on where oil is going.” Story and Video at…
http://www.cnbc.com/id/102258318
INVESTORS IN DENIAL ABOUT THE ENERGY BUST (CNBC)
“Investors remain in denial about the consequences of lower energy prices, and the market has not yet priced in the negatives associated with them, Larry Glazer, managing partner at Mayflower Advisors, said Thursday…Glazer said 15 to 20 percent of the high-yield debt market is exposed to the energy sector, and many of the bonds Wall Street sold the last two years are now under water…everything revolves around the credit markets." Story at…
http://www.cnbc.com/id/102261548?trknav=homestack:topnews:5
THE FED HAS DONE IT AGAIN – HIGH YIELD AT RISK (Bloomberg)
“Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations. Research firm CreditSights Inc. predicts the default rate for energy junk bonds will double to eight percent next year.” Story at…
http://www.bloomberg.com/news/2014-12-11/fed-bubble-bursts-in-550-billion-of-energy-debt-credit-markets.html
MARKET REPORT
Thursday, the S&P 500 was UP 0.5% to 2035 (rounded).
VIX was UP about 8% to 20.02. It is unusual to see the options boys push the
VIX up when the S&P 500 is rising. The options crowd
is very worried even as the S&P 500 bounced up today.
The yield on the 10-year Treasury Note rose slightly to
2.18.
STATISTICALLY SIGNIFICANT DAY
Wednesday was statistically-significant down-day and Thursday was UP as predicted. A concern now is, “Will we get a big up-day that might predict more selling?” CNBC pundits seemed mixed. Some said Santa Clause is coming (meaning the Santa rally) others suggested choppiness will continue.
HINDENBURG OMENS
The pattern of Hindenburg Omens continued today; that makes 5 in a row and my modified version is likely to be less frequent than the traditional Hindenburg Omen.
SENTIMENT
I measure Sentiment as %-bulls calculated as a 5-dMA (bulls/{bulls+bears}) in selected Rydex/Guggenheim funds. My sentiment value is now 84%-bulls, a truly extreme level and close to sell for this one indicator. The are 6-traders betting long for every 1 who is short.
STATISTICAL ANALYSIS
A price indicator in the NTSM system moved to sell yesterday (Wednesday) due to the “panic” move in price-volume. Curiously, this can be interpreted as a bottom too by using the Traders Index (TRIN). TRIN hit 3.5 at the close and that is often a good bottom indication. The only problem here is that the S&P 500 index was not even at a low level, so a bottom interpretation doesn’t seem correct.
LATE DAY SELLING
There was some serious late day selling today, at least after 2PM. That’s not an optimistic sign.
RECESSION
I track the XLI (Industrial Select Sector ETF) as a proxy for cyclical stocks since investors will sell cyclical stocks ahead of a recession. XLI is now underperforming the S&P 500 and that shows concern by investors, but at this point, the underperformance is not large enough to raise a red flag. It’s just a troubling trend that bears watching.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) was 45% at the close Thursday. (A number below 50% is usually BAD news for the markets.) New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-117 . (It was -156 Wednesday so there was some improvement). The 10-day moving average of change in the spread was minus-27. In other words, over the last 10-days, on average, the spread has decreased by 27-each day.
New-high/new-low stats improved some today; that might bring good news if it continues to improve. Internals remained negative 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 HOLD Thursday. Only the VIX indicator is positive. A Price indicator is negative; others remain 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 cut some stock investments today 11 Dec to
take some profits and offset them with losses as noted below. I am probably now closer to 45% invested. --INDIVIDUAL STOCKS--
ENSCO (ESV):
I SOLD Ensco for tax purposes along with some winners (SPY, INTC & others). I can buy them back after the oil situation is clearer. Same for Ensco, but I’ll have to wait 30-days or lose the tax advantage of the sale.
