Job Openings (JOLTS) Report … Stock Market Analysis

JOLTS REPORT (USA Today)
“Job openings surged to a record high in July even as hiring fell, signaling a tighter labor market that's expected to soon push up wage growth. Employers advertised 5.8 million jobs, up from 5.3 million in June and the highest on records dating to 2000…” Story at…
http://www.usatoday.com/story/money/2015/09/09/jolts-report-for-july/71928662/
My cmt: This is bad news for those who fear a FED hike of interest rates.
 
MARKET REPORT / ANALYSIS        
-Wednesday, the S&P 500 was down about 1.4% to 1942 at the close.
-VIX rose about 5% to 26.23.
-The yield on the 10-year Treasury dipped to 2.18%.
 
The S&P 500 opened up Wednesday, but failed at about 1989.  A 50% retracement from the low would be about 2000, so today’s reversal down, just 11-points shy of that level, was not a complete surprise.
 
I still think the S&P 500 needs to retest the 1868 low before this correction ends. 

 

The average length of corrections (top to bottom) since 1946 has been about 97-trading days. The average correction time since 2009 (corrections greater than 10%) has been 66-trading days. The current correction is 77 trading-days since the top. 
 
The Death Cross remains in effect since the 50-dMA is below the 200-dMA for the S&P 500. This is a long term signal for many.  In 2011, the Death cross occurred about 7% before the low.  In 2010, the Death Cross first occurred at the low so it was not a good signal then. 
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) was 56% Wednesday vs. 58% Tuesday.  (A number above 50% is usually GOOD news for the markets, but one can’t feel optimistic the way the day went.  On a longer term, the 50-day moving average of advancing stock was 48% and that’s still a negative longer term.
 
Again, New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus-38. (It was -18 Tuesday.)   The 10-day moving average of change in the spread fell to +20, Wednesday.  In other words, over the last 10-days, on average; the spread has INCREASED BY 20 each day.
 
The internals remained positive on the markets; but I am skeptical at this point.  The Index fell hard after nearly making the 50% retracement level early Wednesday morning.

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 was HOLD. The VIX indicator is negative. Sentiment and Price are neutral. Volume is positive.

MY INVESTED STOCK POSITION:

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%
 
This is a conservative allocation.  The number one priority now is return of capital; not return on capital.
 
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.