“The National Association of Realtors said Wednesday that sales of existing homes climbed 3.2 percent last month to a seasonally adjusted annual rate of 5.49 million, the highest rate since February 2007. Sales have jumped 9.6 percent over the past 12 months, while the number of listings has risen just 0.4 percent.” Story at…
http://abcnews.go.com/Business/wireStory/us-home-sales-surge-june-fastest-pace-years-32614485
CRUDE INVENTORIES (Business Insider)
“The crude oil supply glut is not over just yet. The latest data from the Energy Information Administration showed that US crude oil inventories rose by 2.5 million barrels in the week ending July 17.” Story at…
http://www.businessinsider.com/crude-oil-inventories-july-22-2015-7
My cmt: I like lower oil prices…personally, and for the economy in general.
AIA BILLINGS AT HIGHEST IN 8-YRS (CNBC)
“New demand for projects like healthcare and education facilities, as well as public safety and government buildings drove an index of architecture billings to its highest level in eight years. The American Institute of Architects (AIA) reported a nearly four point jump in its architectural billings index (ABI) in June to 55.7. Any score above 50 reflects an increase in billings.” Story at…
http://www.cnbc.com/2015/07/22/what-this-number-tells-us-about-commercial-real-estate-in-12-months.html
My cmt: This is a measure of design effort by Architects and should reflect construction in a year or so, barring a recession that might change the minds of building owners.
NEW HIGHS OR BUST (CNBC)
"Before talking about the current market, it's imperative to look at the market's activity since March of this year," Acampora said Tuesday on CNBC's "Futures Now." Since the start of March, the market is virtually unchanged. "We saw several instances when the leading averages registered new highs, but only for a few days before selling off again." The S&P 500 hasn't made a new closing high since May 21…Despite his concerns, Acampora is sticking to his year-end target of 2,250 to 2,300—for now. "I have to stress, we need new highs or I'll have a problem later on," he added.” Story at…
http://www.cnbc.com/2015/07/22/the-clock-is-ticking-for-stocks-says-acampora.html
MARKET REPORT/ANALYSIS
-Wednesday, the S&P 500 was down about 0.2% to 2114 at the close.
-VIX was down about 0.8% to 12.12 so, again, the Options boys weren’t too worried today.
-The yield on the 10-year Treasury was down to 2.32%.
The S&P 500 flirted with the lower trend line (around 2110) several times and finally bounced from there late in the day. That’s a good sign given the improving indicators.
Indicators have been improving, in large part because the comparisons from 10-days ago are so bad. Now, Indicators aren’t great (some are lousy), but they are improved vs. the Greek crisis numbers. It seems unlikely that the markets will drop too much farther in the short term.
The Russell 2000 was up 0.3% Wednesday. DWCPF (basically all stocks except the S&P 500) was up also. Perhaps investors are rotating into smaller cap stocks after tech has failed to live up to lofty expectations.
Apple and Microsoft make up about 6% of the S&P 500 so they were a definite drag on the 500, as well as the Nasdaq, DOW, and QQQ-ETF. Apple trades at a PE of around 16 while the S&P 500 is trading at a PE of 18. The market seems to want perfection from Apple even though they are trading at a discount to the S&P 500…go figure.
The 50-dMA of advancing stocks remained 48% Wednesday. Below 50% is not good, but the 10-dMA improved by 3% so that sort of improvement will pull the 50-day up eventually.
I am optimistic on the markets in the short term, if only because the S&P 500 bounced up from its lower trend line and the smaller cap stocks were up Wednesday.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 53% at the close Wednesday. (A number above 50% is usually GOOD news for the markets.
Once again, New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was -251. (It was -133 Tuesday.) That is not good news for the bulls. If this isn’t the low point for spread, the Index could be in trouble.
The 10-day moving average of change in the spread fell to minus-9 Wednesday. In other words, over the last 10-days, on average; the spread has DECREASED by 9 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 indicator is HOLD. The Volume indicator is now positive and all other long-term indicators are neutral. The VIX indicator is leaning to the positive side. If the Options Boys were worried, it would be in negative territory.
MY INVESTED STOCK POSITION
On 13 July, I increased my investments from 30% invested
to 50% invested in stocks. I spilt stock investments roughly equally between
S&P 500, Euro/pacific ETF (EFA), and the Dow Jones Completion Index (DWCPF)
as noted in an earlier post. TSP ALLOCATION (This is a conservative position most appropriate for retirees or conservative investors.) I think all investors would be well served to cut their stock investments to a lower than normal (for each individual) allocation. Until longer term technicals look better, the old adage that one’s stock allocation should equal your age subtracted from 100 seems reasonable. (40years old: 100-40 = 60% in stocks) 50% would be the minimum.
G-Fund (Risk-free yielding 2.1% over the last 12-months): 50%
C-Fund (S&P 500): 15%
S-Fund (DWCPF): 15%
I-Fund (EFA): 20%
