“The key Institute for Supply Management's manufacturing index edged down to a reading of 52.9% from 53.5% in January…One disappointment element was that the employment index of the ISM slowed to 51.4% from 54.1%. The new orders index eased to 52.5% from 52.9%.” Story at…
http://www.foxbusiness.com/markets/2015/03/02/ism-manufacturing-gauge-slows-to-52-in-february/
My Cmt: At least there was no disaster nationally as was indicated by the Chicago region ISM last week.
CONSUMER SPENDING FALLS (WSJ)
“Personal spending, which measures outlays for everything from washing machines to manicures, fell a seasonally adjusted 0.2% in January from the prior month…“The overall tone of this report was encouraging as the relatively strong start to real spending activity in January will support the underlying narrative of sustained positive momentum in the U.S. economy,” said TD Securities analyst Millan Mulraine.” Story at…
http://www.wsj.com/articles/u-s-consumer-spending-decreased-0-2-1425303641
MARKET REPORT
- Monday, the S&P 500 was up about 0.6% to 2117 (rounded).
-VIX fell about 2% to 13.04.
-The yield on the 10-year Treasury Note rose to 2.09%.
RSI
Relative Strength Index (RSI) was 85 Monday – an overbought indication for the short term. RSI is an equation that divides the average size of up-moves over 2-weeks by the average size of all moves over the same period {up/(up+down)}. It is usually expressed as a number rather than a percent by way of some unintuitive math.
RSI can be based on an Exponential Moving Average (EMA) or a Simple Moving Average (SMA). I prefer the SMA with values of 80 overbought and 20 oversold.
Another way to think of the current RSI of 85 is that over the last 14-days the up moves are in the 85th percentile of possible moves. If ALL moves had been up, RSI would have been 100 – a definite short term sell indicator. RSI can be combined with other indicators for trading.
RSI should not be confused with RUS - rodents of unusual size.
VOLUME
Volume was close to normal for the past month today, Monday.
WATCING THE RUSSELL 2000
The Russell 2000 closed at 1243, above the 1240 area that I thought would signal a breakout. A breakout for the Russell would be bullish for other stock-market Indices as well. A healthy stock market needs to see good breadth in the advance. That means small and large cap are going up.
PULLBACK
A pullback is getting closer, but I can’t tell whether it’s a few days away or a few weeks. A pullback would be a 5-6% normal cycle down unless the news gets bad.
NASDAQ 5000
Most major bear markets have 3-major downturns before they are over. If the NASDAQ Composite continues ahead and can convincingly break the prior high of around 5050, this time may be different…Nah. I remember that phrase. It wasn’t different in 2000 or 2007. Maybe this time? We’ll see.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 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 +141. (It was +83 Friday). The 10-day moving average of change in the spread was minus-4. In other words, over the last 10-days, on average, the spread has DECLINED by 4-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
Monday, the NTSM analysis switched to BUY. The PRICE and VIX indicators are positive; VOLUME and SENTIMENT indicators are neutral, although sentiment remains extremely high.
This just means that momentum is up for now. The important BUY call was on 29 October, about 1% above the October bottom.
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) and an EAFE based fund to get some
international exposure because they are the only small-cap and international
choices in my retirement account. (The DWCPF includes all stocks EXCEPT the S&P 500. The DWCPF is 1.8%
ahead of the S&P 500 since 1 February.)
