U.S. employment rose at a solid clip in July and wages rebounded after a surprise stall in the prior month, signs of an improving economy that opened the door wider to a Federal Reserve interest rate increase in September. Nonfarm payrolls increased 215,000 last month…Average hourly earnings increased five cents, or 0.2 percent, last month after being flat in June.” Story at…
http://www.reuters.com/article/2015/08/07/us-usa-economy-idUSKCN0QB1FP20150807
FOSBACK HIGH LOW LOGIC INDEX
The Logic Index slipped to 9.3%, less than the 10% crash-danger level, but Fosback’s data showed that if the Index was above 5% the markets were down around 1.4-percent, 3-months later (data thru 1980). At 9.5%, it suggests little reward going forward. For further details on the Fosback High Low Logic Index see my previous blog at…
http://navigatethestockmarket.blogspot.com/2015/07/tech-problems-norman-fosback-high-low_21.html
MARKET REPORT / ANALYSIS
-Friday, the S&P 500 was down about 0.3% to 2078 at the close.
-VIX fell about 3% to 13.39.
-The yield on the 10-year Treasury fell to 2.17%. (The 10-yr yield was almost 2.5% 6-weeks ago. That’s may be an indication of worry over the stock market.)
RSI is 33 and falling. 30 is the oversold number so it is possible that the markets will bounce at 30 and that could happen as soon as tomorrow…but…Markets can remain oversold for some time so RSI isn’t a guarantee of a bounce, but it is a bit encouraging.
LONG TERM BREADTH
The 50-dMA of stocks advancing on the NYSE remained 47.2% Friday, from 47.2% yesterday. Below 50% is not good; it simply means that more than half of the stocks on the NYSE have gone down over the past 2-1/2 months.
Further, I read a surprising fact on CNBC that over half of the stocks in the S&P 500 are down more than 10% (week of 1 Aug).
And in another measure of long-term breadth, the % of Stocks on the NYSE above their 200-day moving average as of Thursday dipped to 37% – this number is way too small and has been trending down since mid-April. Unless this improves – markets are going down. (The average is 64%.)
It is now difficult to be bullish. It looks like a correction is coming soon, but that belief has been wrong a lot in the last 3-years, so I won’t go into it any further. If the internals improve, perhaps a correction will be avoided once again.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) was 49% Friday vs. 49% yesterday. (A number below 50% is usually BAD news for the markets. While the 10-day value got better, the 10-day value is skewed by the brief upturn 28-31 July. Friday’s value for breadth was 38% and that is the lowest in the last 10-days. Bottom line: Even though the 10-day value increased, the %-stocks advancing is not a good news story yet.
New-lows outpaced New-highs again Friday. The spread (new-highs minus new-lows) was minus-158. (It was -283 Thursday.) This was a solid improvement.
The 10-day moving average of change in the spread rose to +23 Friday. In other words, over the last 10-days, on average; the spread has INCREASED by 23 each day. Internals remained neutral on the markets, but currently, only Breadth is negative. This hints that a correction may be avoided yet again. Too early to say, though - there are other negatives to be resolved.
NTSM
Friday, the NTSM long term indicator is HOLD. Indicators haven’t changed in a while. Price is positive, because up-moves have outpaced down moves recently. All other long-term indicators remain neutral.
