“The labor market's spring rebound strengthened in May as U.S. employers added 280,000 jobs, soundly topping economists' estimates. The unemployment rate rose to 5.5% from 5.4%...because an improving market drew an additional 400,000 Americans into the labor force…” Story at…
http://www.usatoday.com/story/money/2015/06/05/employment-report-for-may/28505001/
HOURLY EARNINGS (Briefing.com)
“Average hourly earnings increased 0.3% in May after increasing only 0.1% in April. The average workweek was flat at 34.5 hours….Big gains in aggregate earnings should nudge the Fed in the direction of the first rate hike.” Charts and details at…
http://www.briefing.com/Investor/Calendars/Economic/Releases/employ.htm
MARKET REPORT
-Thursday, the S&P 500 was down about 0.1% to 2093 at the close.
-VIX dropped about 3% to 14.21. (Options players are not concerned about a correction.)
-The yield on the 10-year Treasury Note was up to 2.4%. (As a percentage move, that’s 4% higher on the day. That’s a lot and bond funds are no doubt taking a hit.)
There was late day selling on the S&P 500 and some late buying on the Russell 2000. The Russell was UP 0.7%. Talk about confusion. The final trades of the day on the S&P 500 were up, i.e., tick was a strong 423. (Subtract the down trades from the up trades for all final trades and you get a positive 423 – that’s fairly strong.) It will be interesting to see if that momentum will carry over until Monday. Only 47% of stocks advanced on the NYSE; that is a negative stat, so confusion reigns with some positive indications and others negative. In general, NYSE Market Internals stink and they are suggesting down moves ahead.
The Relative Strength Index (RSI) dipped to 38 today. That’s not oversold yet, but it is low enough to suggest a turnaround for the optimists since the S&P 500 is now firmly at its lower trend line.
The Index is only 2.4% above its 200-day moving average and that is a good level of support if the Index does break lower.
I will get concerned if the S&P 500 breaks decisively below its trend line; otherwise, the trend is still up.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 43% at the close Friday. (A number below 50% is usually BAD news for the markets. New-lows outpaced New-highs Friday. The spread (new-highs minus new-lows) was minus-89 (It was -46 Thursday.) The 10-day moving average of change in the spread slipped to -14. In other words, over the last 10-days, on average; the spread has decreased by 14 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
Friday, 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 3.9% ahead of the S&P 500. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 1.3% 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.)
