“The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.3 percent after gaining 0.5 percent in November and 0.3 percent in October. The drop, the largest since September 2009, reflected a decline in spending at service stations as gasoline prices fell, as well as weak auto receipts and weather-related softness in demand for utilities.” Story at…
http://www.reuters.com/article/2015/02/02/us-usa-economy-spending-idUSKBN0L619N20150202
Basically, consumers bought the same amount of stuff, but the gas & utility prices went down reflecting lower spending in the stats.
FACTORY ACTIVITY FALLS (WSJ)
“U.S. factory activity decelerated in January, registering its slowest growth in a year as foreign demand for American-made goods weakened, according to a survey released Monday by the Institute for Supply Management. The ISM’s manufacturing purchasing managers index fell to a seasonally adjusted 53.5 in January from 55.1 in December.” Story at…
http://www.wsj.com/articles/u-s-factories-gear-down-again-1422890193
WORST GUIDANCE EVER (Business Indsider)
“In a note to clients on Friday, Goldman Sachs' equity
strategy team noted that over the 34 quarters the firm has tracked guidance,
there have never been more companies guiding below consensus
expectations. Goldman notes that 39 of 45 S&P 500 companies, or 87%
(!), providing guidance for the next quarter have given outlooks below
expectations.” Story at…http://www.businessinsider.com/goldman-worst-earnings-guidance-ever-2015-2
THE CRISIS AWAITING HILLARY OR JEB (Marketwatch)
“When Obama leaves office 23 months from now (to drink out of a coconut on the beach, he jokes), he’ll leave behind a ticking time bomb that he didn’t do a thing about: the fiscal crisis that’s about to explode on Hillary Clinton or Jeb Bush’s watch. Not that Republicans in Congress—for all their hypocritical bloviating—will have done anything, either.” Story at…
http://www.marketwatch.com/story/the-crisis-that-awaits-jeb-or-hillary-2015-02-02?dist=countdown
MARKET REPORT
-Monday, the S&P 500 was up about 1.3% to 2021 (rounded).
-VIX fell about 7% to 19.43.
-The yield on the 10-year Treasury Note rose to 1.67%.
The S&P 500 dipped to about 0.3% above the 200-dMA in the morning and after drifting around rallied strongly late in the day. In the past, the 200-dMA has been a level of strong support suggesting “up” from here. I think the computers on Wall Street decided the technical bottom was yesterday and bought late. The huge late day buying is bullish. Still, I didn’t get a clear signal for a short-term (trading) buy. Even though the S&P 500 moved up from its lower trend line, internals were weaker so I’ll wait to see if the climate will get more positive. I find it difficult to discuss trades in the blog because it’s just too much to keep up with, but perhaps my comments will augment other information from other sources.
One caution for trading now is that the earnings news hasn’t been great making a correction more likely. Long-term, I remain fully invested.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 54% at the close Monday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +107. (It was +91 Friday). The 10-day moving average of change in the spread was minus -5. In other words, over the last 10-days, on average, the spread has DECREASED by 5-each day.(Just a couple of days ago the spread was over 200 for 5-consecutive days, a very bullish indication. It has since pulled back.)
Internals switched back to neutral on the market because the new-high/new-low data is losing momentum.
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
Monday, the NTSM analysis is HOLD. The PRICE indicator is positive; the VIX indicator is negative; Sentiment and Volume are neutral.
MY INVESTED STOCK POSITION
I remain fully invested at 50% invested in stocks in the long-term portfolio. 50% is conservative, but appropriate for a retired guy.
