“The U.S. economy created 223,000 jobs in April, bouncing back from a sluggish period the first three months of the year, as companies shook off the effects of a surging U.S. dollar and falling profits. The unemployment rate fell to a seven-year low of 5.4 percent…”
http://www.cnbc.com/id/102661776
My cmt: While pundits said the expectation was 224,000 jobs, the stock market seemed to be expecting a lower number because futures tripled when the jobs data was released. Perhaps this will provide some fuel to get the markets to significant new highs.
FED TO RAISE RATES IN SEPTEMBER (MartketWatch)
“The rebound in the April job report gives the Federal Reserve the green light to raise interest rates in September, economists said…’I think the April report comes too late to put June on the table, but there is going to be a focus on September,’ said Carl Tannenbaum, chief economist at Northern Trust, in an interview.” Story at…
http://www.marketwatch.com/story/job-report-gives-fed-green-light-to-move-in-september-2015-05-08
Blogged about the above story:
“At current rates the service on the [US] debt is $400+ billion, at NORMAL historic rates the service would be close to $1.4 trillion. That is what "twist" was all about - taking higher interest rate long term bonds off the market to artificially drop the debt service.” - Timothy Wallace
HOURLY EARNINGS (MarketWatch)
“The average wage of American workers rose by 3 cents, or 0.1%, to $24.87 an hour in April, the government said Friday. The increase means wages in the past 12 months have risen at a 2.2% rate…” Story at…
http://www.marketwatch.com/story/us-hourly-pay-rises-01-in-april-up-22-in-past-12-months-2015-05-08
CLUES THE MARKET IS GOING HIGHER
(1) XLI. The Industrial Select Sector ETF (XLI) is a basket of cyclical stocks that are more sensitive to recession than the S&P 500. As such, the spread between the two can be used to gauge investor fears about recession or simply suggest the future of the S&P 500. The theory is similar to DOW Theory that uses transportation stocks in tandem with the DOW Industrials. The XLI has been underperforming the S&P 500 since 23 April. As of yesterday, Thursday and continuing Friday, the XLI is outperforming the S&P 500. That’s good news suggesting the S&P 500 will move higher.
(2) The charts still show an ascending wedge pattern although the top is now horizontal with the bottom trend line rising. This pattern, in an uptrend (and so far we are still in an uptrend), is bullish even though its shape is slightly different than the pattern discussed in my 8 April blog.
I’d guess that the S&P 500 can go higher. First, the Index needs to break above the 2117 line-in-the-sand that has been a trouble area since March 2.
MARKET REPORT
- Friday, the S&P 500 was up about 1.4% to 2116 at the close.
-VIX was down about 15% to 12.9. (The Options Boys changed their tune in a hurry).
-The yield on the 10-year Treasury Note fell to 2.14%.
-Today was a statistically significant, up-day and that is usually followed by a down-day about 62% of the time. While tomorrow may be down, I think the overall trend from here will be up to new highs; perhaps 2190.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) popped up to 47% at the close Friday. (A number below 50% is usually BAD news for the markets; but let’s be optimistic.) In a positive reversal, New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +44. (It was -31 Thursday.) The 10-day moving average of change in the spread rose to minus-6. In other words, over the last 10-days, on average; the spread has fallen by 6 each day.
Internals remained negative on the markets, however, they did improve.
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. 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.)
