“U.S. retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, tempering expectations for a sharp acceleration in consumer spending in the fourth quarter. The Commerce Department said on Wednesday retail sales fell 0.9 percent last month after a 0.4 percent increase in November…Economists at BNP Paribas in New York blamed the decline on difficulties adjusting the numbers for seasonal fluctuations in December because of volatility in holiday spending.” Story at…
http://www.reuters.com/article/2015/01/14/us-usa-economy-idUSKBN0KN1HY20150114
The numbers are distorted by the fact that retail sales include gasoline. "Control" purchases exclude gasoline, building materials, food services and drinking places; control retail sales were up 3.6% year-over-year.
FED BEIGE BOOK
“The Fed’s Beige Book, released Wednesday, again used the phrase “modest to moderate” to describe growth in the U.S. economy, and the Fed’s contacts expressed some optimism that the economy could shift to a somewhat higher gear in 2015…[weakness included]… retailers in New York said results were below plan. In the Dallas district, several expressed concern about the impact of the decline in oil prices on that regional economy. Housing activity was basically flat. Congestion at West Coast ports impeded exports…there were areas of strong growth. High-end merchandise did well, while many areas saw strong sales of cars and trucks, manufacturing activity continued apace, and the travel and tourism segments appeared to be on good footing. Demand for business and consumer credit rose….” Story at…
http://www.marketwatch.com/story/feds-beige-book-shows-concern-over-consumer-spending-and-slumping-oil-2015-01-14
ARUOBA-DIEBOLD-SCOTTI BUSINESS CONDITIONS INDEX (Federal Reserve)
The ADS Index is above zero showing above average Business Conditions and conditions are better now than during all of 2013. The markets have their own worries with rapidly falling commodity prices that may (or may not) be predicting problems ahead for the economy. Right now, the economy seems to be doing OK.
Note from the FED: "We construct the ADS Index using the
latest data available as of January 09, 2015." Chart from the Federal Reserve at…http://www.philadelphiafed.org/research-and-data/real-time-center/business-conditions-index/ads_2007.pdf
IMMINENT MARKET CRASH? No. (MarketWatch)
“Enough already. How many times are commentators going to call for a crash in the market?... Do we have that structure in place yet as we enter 2015?... At this particular point the answer is no, and we won't have that structure unless we move significantly lower. Now, unlike the setup in the oil market, where the structure was such that a break-and-plunge setup was near the highs in that market, that is not the case at all right now with the S&P 500 as we would have to move down significantly just to get the break that could lead to a bear market.” Commentary at…
http://www.marketwatch.com/story/is-this-a-market-ready-to-crash-lower-2015-01-13
COPPER CRASHING NOW (Bloomberg)
“Copper tumbled the most in almost six years…as speculation that demand for raw materials won’t be enough to eliminate a supply glut triggered a sell-off in industrial metals. Copper slumped as much as 8.7 percent in London and fell to the daily trading limit in Shanghai… ‘The news everywhere is doom and gloom,’ said David Lennox, a resource analyst at Fat Prophets in Sydney. ‘Prices are going to keep sinking.’… ‘People are concerned about the demand growth in China,” Chunlan Li, a Beijing-based copper analyst at CRU, said today by phone. ‘We have seen sharp declines in oil prices and the macro-economic picture doesn’t look good.’” Story at…
http://www.bloomberg.com/news/2015-01-14/copper-drops-below-5-500-a-ton-as-world-bank-cuts-forecasts.html
MARKET REPORT
-Wednesday, the S&P 500 was down about 0.6% to 2011 (rounded).
-VIX was up about 4% to 21.48.
-The yield on the 10-year Treasury Note fell to 1.86%.
The S&P 500 had been down much further, but rallied back 1% after 2PM. VIX too was drastically higher before the 2PM reversal. Oil had been down prior to 2PM and staged a late day rally to finish up nearly 4% at the close. It is likely that the stock market followed oil higher. Oil bounced up from a long term trend line going all the way back to 1999 so perhaps oil will rally for a while. That could carry stocks with it. Let’s hope…
Tomorrow could be an important day to see if the markets signal a move significantly lower, or it’s possible they may signal good news with a short term bottom. The S&P 500 is only about 2% above the 200-dMA and that is a support level if the markets break lower.
RSI, (SMA-14)
Relative Strength (that measures the size of up vs. down moves) cycles between tops and bottoms on a 14-day moving average basis. It remains close to oversold so it still looks like the downturn is likely to reverse before it swings into a full-blown correction. That’s far from an endorsement though, because RSI can remain oversold for some time, assuming it does get to an oversold level.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 48% at the close Wednesday. (A number below 50% is usually BAD news for the markets.) New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus-86 (It was +81 Tuesday). The 10-day moving average of change in the spread was down to minus-16. In other words, over the last 10-days, on average, the spread has DECREASED by 16-each day.
Internals switched to neutral on the market because the up volume is trending up. At least the news is not ALL bad.
NTSM
Wednesday, the long-term NTSM system analysis remained HOLD. The VIX and VOLUME indicators remain negative; Price is positive; other indicators are neutral.
I remain fully invested at 50% invested in stocks. 50% is conservative, but appropriate for a retired guy.
