“U.S. crude oil stocks rose by 4.67 million barrels to 455.43 million barrels in the week to Aug. 28, the Energy Information Administration (EIA) said on Wednesday. Analysts in a Reuters poll had expected U.S. crude stocks to have remained flat last week.” Story at…
http://www.reuters.com/article/2015/09/02/us-markets-oil-idUSKCN0R202D20150902
FACTORY ORDERS (Fox News)
“Factory orders rose 0.4 percent in July, the Commerce Department reported Wednesday. Orders had increased a much larger 2.2 percent in June. The modest increase in factory orders in July suggests that manufacturing is still grappling with a variety of challenges…” Story at…
http://www.foxnews.com/us/2015/09/02/us-factory-orders-edge-up-04-percent-in-july-as-business-investment-shows/
ADP JOBS (Marketwatch)
“Private-sector employment gains continued in August at a slightly faster pace than in the prior month. Employers added 190,000 jobs last month, Automatic Data Processing Inc. reported Wednesday…” Story at…
http://www.marketwatch.com/story/private-sector-adds-190000-jobs-in-august-adp-2015-09-02-8911922
FED BEIGE BOOK (Bloomberg)
“The U.S. economy expanded across most regions and industries in July and August, a Federal Reserve report showed, as tighter labor markets boosted wages for some workers. Six of 12 Fed districts reported “moderate” growth, and five others said expansion was ‘modest’…” Story at…
http://www.bloomberg.com/news/articles/2015-09-02/fed-s-beige-book-says-economy-expanded-across-most-regions
MORE ON SENTIMENT
I wrote about Sentiment in yesterday’s blog where I noted that sentiment (%-bulls) remains at extremely high levels using Rydex Guggenheim long/short funds. There was a MarketWatch report yesterday that stated that based on Rydex Nova/Ursa Funds (Bull/bear funds) Sentiment was bearish – basically the opposite of my analysis.
There was a time when the URSA fund was one of very few mutual funds that would short the market with leverage. I couldn’t find the Ursa fund listed on the Guggenheim website. The NOVA fund is listed, but it is thinly traded and one must question whether it is should be used as a measure of sentiment. The funds I use are heavily traded and I expect them to be far more accurate.
My Sentiment analysis remains unchanged; the markets are dramatically overly Bullish based on similar periods when the markets were in correction mode. Since traders using the Rydex funds don’t have a great track record, this is bearish for the markets. Unless bearishness picks up, this suggests further downside ahead.
MARKET REPORT / ANALYSIS
-Wednesday, the S&P 500 was up about 1.8% to 1949 at the close.
-VIX fell about 17% to 26.09.
-The yield on the 10-year Treasury rose to 2.19%.
There was a strong upward finish on the day that likely will have follow-thru tomorrow.
The 2011 correction lasted 108-days. The 2015 correction is at day-72.
The Death Cross remains in effect since the 50-dMA is below the 200-dMA for the S&P 500.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) was 45% Wednesday vs. 40% Tuesday. (A number below 50% is usually BAD news for the markets. Again, New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus-61. (It was -89 Tuesday.) There were only 8 new-highs Wednesday.
The 10-day moving average of change in the spread rose to +18, Wednesday. In other words, over the last 10-days, on average; the spread has INCREASED BY 18 each day. Internals SWITCHED to neutral on the markets.
NTSM
Wednesday, the NTSM long term indicator was SELL. VIX and Volume indicators are negative. Sentiment and Price are neutral. The “Death Cross” on the S&P 500, remains because the 50-day moving average (dMA) has crossed below the 200-dMA.
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 70%
C-Fund (S&P 500): 15%
I-Fund (EFA): 15%
When I do move back into stocks, I will initially invest a high percentage into stocks and phase back if the Index gets to prior highs.
