“The number of Americans seeking first-time unemployment benefits fell last week, a sign companies are laying off fewer workers and the economy continues to steadily add jobs. Initial claims…declined 8,000 to a seasonally adjusted 276,000 in the week ended May 30…The current level of claims has previously occurred during healthy economic expansions. Also, the number of Americans who have begun receiving benefits—known as “continuing claims”—fell to the lowest level in 14 years.” Story at…
http://www.wsj.com/articles/u-s-jobless-claims-fall-to-276-000-1433421109
PRODUCTIVITY (ABC News)
“U.S. worker productivity declined more sharply in the first three months of the year than previously thought while labor costs rose more quickly. Productivity fell at a 3.1 percent rate in the first quarter, a bigger drop than the 1.9 percent decline estimated a month ago…There is concern about a slowdown in productivity growth that has been evident recently and economists are split over whether this is a short-term development or a longer-term problem.” Story at…
http://abcnews.go.com/Business/wireStory/us-productivity-fell-quarter-labor-costs-31521362
MARKET REPORT
-Thursday, the S&P 500 was down about 0.9% to 2096 at the close.
-VIX rose about 8% to 14.71.
-The yield on the 10-year Treasury Note dropped to 2.31%. (As a percentage move, that’s 2.5% lower in a day.)
Today was a statistically significant, down-day and that is usually followed by an up-day about 62% of the time. Since the S&P 500 has again dropped slightly below the 50-dMA, one would normally expect the Index to move up from here. No guarantees though. I’ve written this a couple of times to no avail. At this point, the Index really needs to make up its mind. It has just about reached the terminal point in the ascending triangle.
The Relative Strength Index (RSI) dropped to 39 today. That’s not oversold yet, but it is low enough to suggest a turnaround given the other evidence.
The Index is only 2.5% above its 200-day moving average and that is a good level of support if the Index does break lower. I am betting we go higher; but we’ll see.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 44% at the close Thursday. (A number below 50% is usually BAD news for the markets. In a negative reversal, New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-46 (It was +47 Wednesday.) The 10-day moving average of change in the spread slipped to -12. In other words, over the last 10-days, on average; the spread has decreased by 12 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
Thursday, 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 3.3% ahead of the S&P 500. 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 current 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.)
