“More Americans filed for unemployment benefits last week, but applications rose less than expected, holding at a level that signals a strong job market. Initial claims for jobless benefits rose 11,000, to 278,000, for the week ended Jan. 31…” Story at…
http://www.latimes.com/business/la-fi-jobless-claims-20150205-story.html
PRODUCTIVITY FALLS (WSJ)
“The productivity of nonfarm workers, measured as the output of goods and services per hour worked, fell at a 1.8% seasonally adjusted annual rate in the fourth quarter...From a year earlier, productivity was flat...’We would caution against over-interpreting one month’s data, as these series are prone to significant revisions from quarter to quarter,’ Barclays economist Blerina Uruçi said in a note to clients.” Story at…
http://www.wsj.com/articles/productivity-fell-at-1-8-pace-in-fourth-quarter-1423143259
MARKET REPORT
-Wednesday, the S&P 500 was up about 1% to 2063 (rounded).
-VIX was down about 8% to 16.85.
-The yield on the 10-year Treasury Note rose to 1.80%.
49% of Stocks were above their 200-dMA at the close Wednesday (data is late) so this stat has improved markedly over the past couple of days. It’s looking a lot more positive now and will probably break above 50% today. Investors are getting more positive on the markets and that is also reflected in the falling VIX.
The S&P 500 made it to the 2060 level (2063 to be exact). I said yesterday, “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 2060 level. If not, it will be correction time again.”
I should have said “significantly above the 2060” line. I’d like to see the Index close at least 3% above the 2060 level to feel better. All in all though, I am more bullish now that a few days ago. The internals look pretty good overall, even though they are now neutral. There were very few new-lows today. One has to be optimistic on the technical data.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 55% at the close Thursday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Thursday. The spread (new-highs minus new-lows) was +124. (It was +102 Wednesday). The 10-day moving average of change in the spread was minus-11. In other words, over the last 10-days, on average, the spread has DECREASED by 11-each day.
Internals switched to 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
Wednesday, 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” at…
http://navigatethestockmarket.blogspot.com/2015/01/fomc-meetinglean-toward-small.html
