“U.S. employers hired steadily last month and workers’
wages picked up, suggesting the labor market is nearing full health and boosting the likelihood of the Federal Reserve raising short-term
interest rates this year. U.S. nonfarm payrolls grew by a seasonally
adjusted 257,000 jobs in January…[and] in a closely watched development, the
average hourly wage of private-sector workers rose 0.5% from December…a notable
pickup from prior months.” Story at…
JOBS “BIG PICTURE” (Briefing.com)
“Strong employment and wage growth in January shows that
the sluggishness in the December employment report was not the start of a new
labor trend.” Commentary and charts at…
PLOSSER: HARD TO NOT RAISE RATES (CNBC)
“It is hard to make an argument to justify the Federal
Reserve not hiking rates, said Charles Plosser, the president of the
Philadelphia Fed, on Friday.” Story at…
EARNINGS (FACTSET)
“For Q1 2015, 52 S&P 500 companies have issued
negative EPS guidance and 10 have issued positive EPS guidance. The percentage
of companies issuing negative EPS guidance for Q1 2015 is 84% (52 out of 62),
which is above the 5-year average of 68%.”
“Looking at the first half of 2015, analysts are now
projecting year-over-year declines in both earnings and revenues for both Q1
2015 and Q2 2015…Most of these downward estimate revisions have occurred in the
Energy sector. Despite the estimate reductions in the first half of 2015,
analysts are looking for record-level EPS in the second half of 2015…The
forward 12-month P/E ratio is 16.9, which is well above the 5-year and 10-year
averages.” – FACTSET Earnings Insight at…
STILL TRADING? CAUTION: HIGH FREQUENCY TRADING ZONE
(YahooFinance)
“…the last year has been a singular nightmare for
individuals but the machines are, at least according
to the Wall Street Journal, having their best year since 2008. You might
remember 2008. That was the year stocks moved 5% a day and the world nearly
ended. …What can you do? Nothing. Literally. You can't outtrade machines. The
algos are set up to create then capitalize on momentum of human traders. Don't
play into it. Buy, hold, study. Sound your yawp against the machines by not
handing them your bankroll. In the long run that's your only defense.”
Commentary at…
Key words here: “…algos are set up to create then
capitalize on momentum…” This is a simple way of saying the system is
rigged. Isn’t that against the law?
MARKET REPORT
-Friday, the S&P 500 was down about 0.3% to 2055 (rounded).
-VIX was up about 4% to 17.51.
-The yield on the 10-year Treasury Note rose to 1.94%.
STILL WATCING THE CHARTS
The S&P 500 made it to the
2060 level (2063 to be exact, on Thursday).
I said Wednesday, “2060 doesn’t just look like resistance (an area that
the market indices are finding difficult to exceed); it looks like a brick
wall. The S&P 500 has been higher than 2060, but it hasn’t stayed there and
it has experienced 7-large, up-moves to that level with little or no
follow-thru going all the way back to 21-November. I’ll feel more bullish if
the Index can get thru the significantly thru the 2060 level. If not, it will
be correction time again.”
The Index pushed up to around
2072, but didn’t stay there - maybe next week.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) was 54% 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 +110. (It was +124 Thursday). The 10-day moving average of change in the
spread was minus-15. In other words, over the last 10-days, on average, the
spread has DECREASED by 15-each day.
Internals remained neutral 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
Friday, the NTSM analysis is HOLD. The PRICE indicator is positive; VIX,
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.
My position in the S&P 500
is very small now. I have invested in
the Dow Jones US Completion Total (^DWCPF) instead, because that is the only
small-cap choice in my retirement account.
(The DWCPF includes all stocks EXCEPT
the S&P 500.) I expect small caps to
outperform multi-nationals this year. For my reasoning see “Time to Lean Toward
Small Caps” a
http://navigatethestockmarket.blogspot.com/2015/01/fomc-meetinglean-toward-small.html
