“New orders for U.S. factory goods unexpectedly fell in April as demand for transportation equipment and a range of other goods weakened, suggesting that manufacturing remained constrained by a strong dollar and spending cuts in the energy sector. New orders for manufactured goods slipped 0.4 percent after a slightly upwardly revised 2.2 percent increase in March…” Story at…
http://www.cnbc.com/id/102725596
AUTO SALES STRONG (Yahoo Finance)
“The U.S. auto industry remained on track for the best sales year in almost a decade as consumers bought cars and trucks at the fastest monthly pace since early 2006.” Story at…
http://finance.yahoo.com/news/u-may-auto-sales-race-141717589.html#
HUSSMAN FUNDS WEEKLY MARKET COMMENTARY (Hussman Funds)
“Present market conditions join the second most extreme valuations in U.S. history (on measures most reliably correlated with actual subsequent 10-year S&P 500 total returns) with increasing divergences and dispersion in market internals…
…we do see a much larger than normal share of issues trading at new 52-week lows than is typically consistent with a healthy advance or strong investor preferences toward risk. A simple way to get at this was suggested decades ago by Norm Fosback – examine the smaller of new highs and new lows, as a share of total issues traded. At present, the 26-week average of that figure is greater than 4.75% of issues traded – a level that we’ve only seen a handful of times since the 1970’s.” – John Hussman, PhD. Weekly Market Commentary at…
http://www.hussmanfunds.com/wmc/wmc150601.htm
My cmt: In his book Stock Market Logic, Fosbeck suggested a 50-day EMA (10-week average) for the Fosbeck High Low Logic Indicator not the 26-week average indicated above. I happen to track this (although it is not in my timing model per se). On a 50-day EMA basis, the Hi Low Logic Indicator is not currently near a sell signal nor is it particularly elevated. It has been higher for almost all of 2015, although it is now climbing.
I will say that the new-high new-low data in general indicates down is more likely direction for the S&P 500 rather than up; but until the market breaks down, the trend is up. Even so, I don’t see much suggesting a crash at this point except for the unknowns such as Greece, China, etc., but it certainly should be noted that the current up-trend is getting very old.
MARKET REPORT
- Tuesday, the S&P 500 was down about 0.1% to 2110 at the close.
-VIX rose about 2% to 14.24.
-The yield on the 10-year Treasury Note rose to 2.26%.
The S&P 500 chart pattern is presently in an ascending triangle. The top is nearly flat while the lows track the lower trend line. “The ascending triangle is a bullish formation that usually forms during an uptrend as a continuation pattern.” – StockCharts.com at…
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:ascending_triangle_continuation
Another possible good sign, the Russell 2000 (small cap stocks) has been outperforming the S&P 500 for the last 5-days to 1-month and it would be a positive development if the smaller cap stocks can regain some leadership.
Market Internals are negative and that is not a good sign for the near future.
Overall, the markets are not out of danger since new highs have been hard to come by and the triangle in the charts is close to a breaking point. Up or down? Time will tell.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) slipped to 46% at the close Tuesday. (A number below 50% is usually BAD news for the markets. New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +16. (It was +6 Monday.) The 10-day moving average of change in the spread slipped to -7. In other words, over the last 10-days, on average; the spread has decreased by 7 each day.
Internals remain 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 2.9% ahead of the S&P 500. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 2.3% ahead of the S&P 500.
THRIFT SAVINGS PLAN (TSP) MEMBERS
My new TSP Allocation: 50%-G; 10%-C; 20%-S; 20%-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.)
