“The pace of growth in the U.S. services sector rose to a 5-month high in April…The Institute for Supply Management said its services sector index rose to 57.8 last month, up from 56.5 in March…[but]…exports index plummeted…the U.S. trade deficit ballooned...Despite the upbeat services sector report, overall, data suggest the economy contracted.” – Reuters Story at…
http://www.peoplespunditdaily.com/news/economy/2015/05/05/ism-services-sector-index-unexpectedly-up-from-month-prior/
With a large trade imbalance some are saying that Q1 GDP may have been negative. Markets are beginning to worry that the economy may be worse than expected and the rebound predicted for Q2 may not occur.
MARKET REPORT
-Tuesday, the S&P 500 was down about 1.2% to 2089 at the close.
-VIX was up about 11% to 14.29.
-The yield on the 10-year Treasury Note rose to 2.17%.
In spite of worrisome down-trends in price and market internals, there were a few good signs.
Today was a statistically significant, down-day and that is usually followed by an up-day about 62% of the time. The S&P 500 has again dropped back to the 50-dMA. When combined with the statistically significant down-day, this signals the Index will usually move up from here. Bulls should hope so; otherwise it may be correction time. Tomorrow may be an important clue for the future.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 47% at the close Tuesday. (A number below 50% is usually BAD news for the markets.) In a negative reversal, New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus-16. (It was +37 Monday.) The 10-day moving average of change in the spread fell to minus-8. In other words, over the last 10-days, on average; the spread has fallen by 8 each day.
Internals remained neutral on the markets. UP Volume is still climbing on a smoothed 10-day basis, otherwise all of the internal indicators would be headed down.
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, 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 1.4% 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. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 2.4% 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.)
