“U.S. private employers hired the most workers in six months in June and factory activity accelerated, providing fresh evidence the economy was gathering solid momentum after contracting at the start of the year…The ADP National Employment Report showed 237,000 private-sector jobs were created in June…” Story at…
http://www.reuters.com/article/2015/07/01/us-usa-economy-employment-adp-idUSKCN0PB4OI20150701
ISM INDEX UP (WSJ)
“The ISM’s manufacturing purchasing managers index rose to 53.5 in June from 52.8 in May.” Story at…
http://www.wsj.com/articles/ism-manufacturing-index-rises-to-53-5-in-june-near-expectations-1435760056
CONSTRUCTION SPENDING UP (Reuters)
“U.S. construction spending rose in May to its highest level in just over 6-1/2-years as outlays increased across the board, the latest sign of momentum in the economy. Construction spending increased 0.8 percent to an annual rate of $1.04 trillion…” Story at…
http://www.reuters.com/article/2015/07/01/us-construction-spending-idUSKCN0PB4ZC20150701
CRUDE INVENTORIES (Reuters)
“U.S. crude stocks rose last week for the first time since April, while gasoline stocks decreased and distillate inventories increased, data from the Energy Information Administration showed on Wednesday. Crude inventories rose by 2.4 million barrels in the last week, compared with analysts' expectations for an decrease of 2 million barrels.” Story at…
http://www.reuters.com/article/2015/07/01/energy-eia-oil-idUSL1N0ZH18W20150701
VIX BUY SIGNAL (MarketWatch)
“Last week, the VIX did something it hasn't done since June 6, 2014. It closed below the lower Bollinger Band…Even by itself, such a rare move is significant because it shows that the VIX is overextended to the down side.” Commentary at…
http://www.marketwatch.com/story/here-comes-the-best-vix-buy-signal-of-the-season-2015-06-30
A rising VIX is generally not good for the stock market. While focused on the VIX, this article is also suggesting trouble ahead for the stock markets.
MARKET REPORT
-Wednesday, the S&P 500 was up about 0.7% to 2077 at the close.
-VIX fell about 12% to 16.09.
-The yield on the 10-year Treasury Note rose to 2.42%.
The Greece drama will continue to put pressure on stocks. I doubt that the markets will remain settled for too long. I don’t have a crystal ball so no way of knowing where this market will go relative to Greece issues. We have observed deteriorating internals and Greece may provide a catalyst for a correction.
SOME CAUTIONARY THOUGHTS
-The 50-day value of stocks advancing on the NYSE remained 48%. Simply, that means that less than half of the stocks on the NYSE have been going up over the last 50-days. That is not a good sign. It hasn’t done that since last October’s 7% mini-correction.
-In a related stat, the percentage of stocks above their 200-day moving average was up slightly to 43% Tuesday (data is a day late). This is 2-standard deviations below norm and is suggesting trouble.
-In the last 10-days, only 41% of the total volume on the NYSE has been up-volume. If I used this measure for my internals volume indicator the internals would be negative.
-Statistical analysis has been indicating a possible top due to the small moves in price-volume when compared to the norm.
SOME BULLISH THOUGHTS
If we see improving internals, that would be a positive sign for the stock market and might indicate that a correction might be avoided.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 47% at the close Wednesday. (A number below 50% is usually BAD news for the markets.
New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus-126 (It was -213 Tuesday.) While this has improved, it is far from a good number.
The 10-day moving average of change in the spread rose to minus-14. In other words, over the last 10-days, on average; the spread has DECREASED by 14 each day.
Internals remained neutral 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
Wednesday, the NTSM long-term analysis switched to HOLD. PRICE, VIX, VOLUME and SENTIMENT indicators are now all neutral.
MY INVESTED STOCK POSITION
Wednesday I cut my investments from 50% invested to 30%
invested in stocks, all in an S&P 500 index due to my SELL signal on
Monday.I am keeping 30% invested since it assures I will have gains if the market goes up. On the other hand even in a worst case scenario I would only lose 15% in the unlikely event the market were to be cut in half.
THRIFT SAVINGS PLAN (TSP) MEMBERS
My TSP Allocation: 70%-G; 30%-C.
