“U.S. industrial production fell slightly in December as warmer-than-usual weather tamped down demand for heating, though underlying figures suggest steady economic growth underpinned by rising output from factories and the oil and gas industry.Industrial production, which measures the output of U.S. manufacturers, utilities and mines, decreased a seasonally adjusted 0.1% from the prior month…” Story at…
http://www.wsj.com/articles/u-s-industrial-production-down-0-1-in-december-1421417702
MICHIGAN SENTIMENT (Advisor Perspectives)
“The Preliminary University of Michigan Consumer Sentiment for January came in at 98.1, a strong surge from last month's final reading of 93.6. This is the highest level of sentiment in eleven years.” Story and commentary at…
http://www.advisorperspectives.com/dshort/updates/Michigan-Consumer-Sentiment-Index.php
WATCH OUT FOR OIL ETFS: CONTANGO!
“The [oil] market is stuck in something called contango…crude contracts to be delivered in coming weeks are lower than those on contracts due later. Exchange-traded fund (DBO:US) managers, as a result, are left to sell the cheaper expiring oil contracts and re-invest the proceeds in the more expensive ones due the following month, creating a vicious cycle that erodes returns….[Contango has existed in the past, and ruined returns then too.]…From 2009 to 2012, crude prices soared twofold, yet because [of] contango…the biggest U.S. oil fund (USO:US) gained less than 1 percent over that time.” Story at…
http://www.businessweek.com/news/2015-01-15/the-cruel-oil-market-math-conspiring-against-etf-bulls-energy
So if you want to bet on a bounce in oil, look at one of the oil or oil services stocks rather than an ETF.
MARKET REPORT
-Friday, the S&P 500 was up about 1.3% to 2019 (rounded).
-VIX fell about 5% to 21.25.
-The yield on the 10-year Treasury Note rose to 1.83% as traders moved to stocks.
BOTTOM
S&P 500 fell to 1988 (about 1% above the 200-dMA) around 10:15 AM Friday and bounced up from there. As I look at market data, it still appears that Thursday (15 Jan) was the short-term low. Volume dropped on Thursday as the S&P 500 made a new short-term low and there were improvements below the radar in the market internals that suggested a bottom. Today’s action did nothing to dispel the thought. Still, the turn-around wasn’t particularly strong (except in price action) so I am left with a feeling that the bottom was yesterday with say…a 65% conviction level. A couple of more days and I may feel better about it. I am not alone in feeling bullish; Tom McClellan advised his readers to go long...
TOM McCLELLAN IS BUYING (MarketWatch – Wednesday/14 Jan)
“Tom McClellan, who publishes the widely-read McClellan Market Report, has been calling for the stock market’s latest pullback to end some time this week, if it fell enough to cause an oversold condition. After the S&P 500 slumped as much as 1.7% in intraday trade Wednesday, before closing down just 0.6%, he said he would “change to all out bullish if Thursday is a down day.” Story at…
http://www.marketwatch.com/story/stocks-have-dropped-enough-to-turn-one-technician-all-out-bullish-2015-01-15
Thursday was a down day so McClellan was advising his readers to go long. There was also a lot of late-day buying Friday so there’s another clue that Thursday was the low.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 49% at the close Friday. (A number below 50% is usually BAD news for the markets.) New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +152 (It was +69 Thursday). The 10-day moving average of change in the spread rose to +9. In other words, over the last 10-days, on average, the spread has INCREASED by 9-each day.
Internals remained neutral on the market, but improved considerably.
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
Friday, the long-term NTSM system analysis remained HOLD. The VIX indicator remains negative; other indicators are neutral. I am leaning bullish now, so hopefully there will be some follow-thru next week that would allow me to issue a Buy.
MY INVESTED STOCK POSITION
I remain fully invested at 50% invested in stocks. 50% is conservative, but appropriate for a retired guy.
