“Demand for big-ticket manufactured goods fell last month, but underlying figures suggest business investment is slowly starting to pick up. Orders for durable goods--products such as power saws and hot tubs designed to last at least three years--declined a seasonally adjusted 0.5% in April from a month earlier…the broader trend suggests demand may be stirring after several weak months.” Story at…
http://www.nasdaq.com/article/us-april-durable-goods-orders-fall-05-20150526-00442
CAPITAL EQUIPMENT (Bloomberg)
Orders for capital equipment rose in April for a second straight month, a sign U.S. business investment could pick up in the second half of the year…Bookings for non-military capital goods excluding aircraft, a proxy for future corporate spending on new equipment, advanced 1 percent after a 1.5 percent gain in March…” Story at…
http://finance.yahoo.com/news/orders-capital-equipment-u-climb-124906432.html
Capital equipment: “Any equipment used by an organization to produce other commodities.” - Wiktionary
CONSUMER CONFIDENCE UP SLIGHTLY (WSJ)
“The Conference Board, a private research group, said Tuesday its index of consumer confidence increased to 95.4 from a revised 94.3 in April…“This moderate firming in confidence is a positive, suggesting that consumers are looking beyond the soft first quarter and believe that conditions have stabilized,” wrote Jim Baird, chief financial officer at Plante Moran Financial Advisors…” Story at…
http://www.wsj.com/articles/u-s-consumer-confidence-edges-up-to-95-4-in-may-1432650070
CONSUMER PRICE INDEX (Doug Short)
This piece was an interesting read, even if it did tweak a pet peeve of mine. (Hint… college tuition; brought to you by incompetent administrators and tax-dollar handouts that don’t encourage cost cutting.) Doug presented a number of enlightening charts with analysis on CPI. I’ve included one below along with his commentary.
“The next chart will come as no surprise to families footing the bill for college tuition. Here we've separately plotted the College Tuition and Fees subcategory of the Education and Communication expenditure category. Note that the steady staircase in this cost matches the annual cost increases in late summer for each academic year.” – Doug Short
Chart and commentary from Advisor Perspectives at…http://www.advisorperspectives.com/dshort/updates/CPI-Category-Overview.php
MARKET REPORT
- Tuesday, the S&P 500 was down about 1% to 2104 at the close.
-VIX rose about 16% to 14.06.
-The yield on the 10-year Treasury Note fell to 2.15%.
The S&P 500 closed at its lower trend line today. The move down was statistically significant (exceeding a multiple of standard deviations in price and volume that often leads to a reversal in the opposite direction). Therefore, the lower trend line will probably hold and I’d expect to see further upside ahead.
Market internals don’t look good now, but I expect them to improve based on today’s big move down, i.e., statistics indicate the most likely direction is up from here.
As of Tuesday, there still have been only 46-up days in the last 5-months and that is a low number that suggests further upside in a Bull market. For the time being, we are still in a bull-market and I remain bullish for the next few months…BUT…data can be interpreted in many ways – this stat could be foreshadowing problems. Why? If more than half of the trading-days over the last 5-months have been down, it could mean trouble ahead for the markets.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 49.6% at the close Tuesday. (A number below 50% is usually BAD news for the markets. On a negative reversal, New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus-43. (It was +25 Friday.) The 10-day moving average of change in the spread dropped to minus-8. In other words, over the last 10-days, on average; the spread has decreased by 8 each day.
Internals switched to negative on the markets.
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 2014, using these
internals alone would have made a 9% return vs. 13% 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, nearly straight-up year like 2014.
NTSM
Tuesday, the NTSM analysis remained HOLD. PRICE is positive. VOLUME, VIX and SENTIMENT indicators are neutral, although (as always) sentiment remains extremely high.
MY INVESTED STOCK POSITION
I remain fully invested at 50% invested, mostly in smaller
cap-stocks in the long-term portfolio with some international stocks. 50% is
conservative, but appropriate for a conservative retired guy. The Dow Jones US Completion Index (all stocks except the S&P 500 – the “S” fund in the TSP) remains ahead of the S&P 500. Since 1 February it is 2.5% ahead of the S&P 500. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 3.3% ahead of the S&P 500.
THRIFT SAVINGS PLAN (TSP) MEMBERS
My TSP Allocation: 50%-G; 10%-C; 25%-S; 15%-I. (50% cash is too high for non-retirees, however, the “G”-fund did return 2.2% over the last 12-months and that is exceptional for risk-free money.)
