“European leaders gave Greece a stark ultimatum Tuesday night: reach a new bailout agreement with its creditors by Sunday or face bankruptcy and expulsion from the euro currency system. The leaders gave Greece until Thursday to submit new economic reform proposals to justify fresh lending by international creditors, and they said the group would meet again Sunday to make a final decision on whether to approve another bailout for the distressed nation.” Story at…
http://www.usatoday.com/story/money/2015/07/07/greece-eurozone-meeting/29804091/
JOLTS OPENINGS AT RECORD HIGH (US News.com)
“The number of job openings across the country ticked up in May for a second record-setting month, according to data released Tuesday by the Labor Department. The so-called JOLTS (Job Openings and Labor Turnover Summary) report showed the country's labor market held nearly 5.4 million open positions in May, up slightly from April's 5.3 million, which at the time boasted the highest total in the data series' nearly 15-year history…” Story at…
http://www.usnews.com/news/articles/2015/07/07/job-openings-reach-record-high-in-labor-departments-jolts-report
EARNINGS INSIGHT (FACTSET)
“Fewer companies have lowered the bar for earnings for Q2 2015 relative to last quarter…Of the 107 companies that have issued EPS guidance for Q2 2015, 80 have issued negative EPS guidance and 27 have issued positive EPS guidance. The percentage of companies issuing negative EPS guidance is 75% (80 out of 107). This percentage is above the 5-year average of 69%, but below the percentage recorded at the same point in time in the first quarter of 84%....
…The estimated earnings decline for Q2 2015 is -4.5%. If this is the final earnings decline for the quarter, it will mark the first year-over-year decrease in earnings since Q3 2012 (-1.0%), and the largest year-overyear decline in earnings since Q3 2009 (-15.5%).” Earnings Report at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_7.2.15/view
MARKET REPORT
- Tuesday, the S&P 500 was up 0.6% to 2081 at the close.
-VIX fell about 5% to 16.09.
-The yield on the 10-year Treasury dropped to 2.23%.
Tuesday, the S&P 500 fell to the 200-dMA and bounced up from there on volume about 10% above the norm for the month. In spite of the big move, the 50-dma of advancing stocks remained 47% and in the last 10-days, only 38% of the total volume on the NYSE has been up-volume. (That stat was 39% Monday.) Both of these need to be above 50% to indicate a healthy market.
In a related stat, the percentage of stocks above their 200-day moving average dipped to 42% Monday (data is a day late). This is 2-standard deviations below norm and is suggesting trouble.
RSI is not yet oversold so the S&P 500 Index has a bit further to fall.
For all of the worry over Greece, the S&P 500 is only 2.3% down from its all-time high.
I still expect that the S&P 500 will go lower, but I don’t know how far since it is news driven. I’m guessing that the S&P 500 will get below its 200-day moving average, but a Greek settlement could send the markets soaring. We’ll see…
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 44% at the close Tuesday. (A number below 50% is usually BAD news for the markets.
New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus-252. (It was -173 Monday.) This is a bad number and suggests further downside ahead.
The 10-day moving average of change in the spread dropped to minus-37. In other words, over the last 10-days, on average; the spread has DECREASED by 37 each day.
Internals remained negative on the markets continuing to suggest further trouble.
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 long-term analysis is HOLD. SENTIMENT is negative, but only because the sell signal from 4-days ago is held for 5-days. PRICE, VIX, and VOLUME indicators are neutral.
MY INVESTED STOCK POSITION
On 30 June, I cut my investments from 50% invested to 30%
invested in stocks, all in an S&P 500 index due to my SELL signal the day
before. 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.
