“Manufacturing expanded in April as the PMI® registered 51.5 percent, the same reading as in March, indicating growth in manufacturing for the 28th consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI® in excess of 43.1 percent, over a period of time,
generally indicates an expansion of the overall economy. Therefore, the April
PMI® indicates growth for the 71st consecutive month in the overall economy,
and indicates expansion in the manufacturing sector for the 28th consecutive
month.” Press release at…
https://www.instituteforsupplymanagement.org/news/NewsReleaseDetail.cfm?ItemNumber=29317MICHIGAN SENTIMENT (oanow.com)
“Optimism about the job market lifted U.S. consumer sentiment in April to its second-highest level since 2007. The University of Michigan's sentiment index rose to 95.9 from 93 in March. Only January's reading of 98.1 has been higher since 2007, the year the Great Recession began. Over the past five months, sentiment has been, on average, at its highest level since 2004.” Story at…
http://www.oanow.com/apwire/news/business/article_7a81f97d-32cc-5706-98e2-2d6d82148ec7.html
“U.S. construction spending fell in March compared to February as both private-sector and government construction declined. However, spending was up for the first quarter of 2015 compared to the same period last year. Construction spending declined 0.6% from February…” Story at…
http://www.forbes.com/sites/erincarlyle/2015/05/01/march-construction-spending-falls-0-6-q1-2015-up-over-last-year/
ATLANTA FED GDP FORECAST UNDER 1% FOR THE 2ND QUARTER (Business Insider)
“The initial GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 0.9 percent on April 30. Real GDP grew 0.2 percent in the first quarter, according to the "advance" estimate from the U.S. Bureau of Economic Analysis, 0.1 percentage point higher than the GDPNow model nowcast."
Business Insider pointed out that the Atlanta Fed nailed the GDP forecast for the first quarter. Now their 2nd quarter forecast looks weak too.
MARKET REPORT
-Friday, the S&P 500 was up about 1.1% to 2108 at the close.
-VIX was down about 13% to 12.70.
-The yield on the 10-year Treasury Note rose to 2.11%.
-Today was a statistically significant, up-day and that is usually followed by a down-day about 62% of the time. This time that outcome may have a lower probability. When the Index is around the 50-dMA, there can be several days of strong up-moves.
CORRECTION
Today’s action looks like a normal bounce from the 50-dMA so a correction is much less likely now, but not impossible of course. The markets have gone nowhere for 2-months. A break-out to the upside could give some nice gains before summer. I’ll go back to my prior comment: I think a pullback is coming, but it is probably weeks away.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 52% at the close Friday. (A number above 50% is usually GOOD news for the markets.) In a positive reversal, New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +9. (It was -14 Thursday.) The 10-day moving average of change in the spread was zero. In other words, over the last 10-days, on average; the spread has been flat each day.
Internals remained negative on the markets, but internals improved significantly.
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
Friday, the NTSM analysis remained HOLD. PRICE, 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) continues to outperform the S&P
500. Since 1 February it is 1.6% ahead
of the S&P 500. The S&P 500 Index has gained during earnings season
since earnings were not as bad as feared.
The Completion Index was outperforming the S&P 500 by nearly 5% a
month ago. I saw a report on CNBC that
there was heavy volume in the small and mid-cap ETF’s so I expect smaller caps
to continue to outperform the S&P 500.
Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 3.1% 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.)
