“Fewer Americans lined up last week to file for jobless benefits, highlighting the persistent strength of the labor market. Claims for unemployment insurance fell by 6,000 to 275,000 in the week ended Sept. 5, from a revised 281,000 in the prior period…” Story at…
http://www.bloomberg.com/news/articles/2015-09-10/decline-in-u-s-jobless-claims-shows-resilient-labor-market
CRUDE INVENTORIES (Street Insider.com)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.6 million barrels from the previous week. At 458.0 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.” Story at…
http://www.streetinsider.com/Commodities/Weekly+EIA+Data+Shows+Large+Build+in+Crude+Inventory/10882137.html
CHINA COMMENTS
I am not a fan of doom-and-gloom books, but a friend handed me a copy of “The Big Drop” by James Rickards. I opened the book to page 74 and read a paragraph with which I wholeheartedly agree: “Chinese growth statistics have been overstated for years…because 45% of Chinese GDP is investment and much of that is wasted on white elephant infrastructure.” We’ve had our own problems with overbuilding, so a capitalistic society is not perfect by any means. Just my opinion, but I suspect central planning will be far less efficient than the basic laws of supply and demand. Further, I don’t see how China avoids recession; the stock market is down 40% and headed lower (I think). It will drag the country into recession just like the dot.com stock-market crash pulled the US into recession. According to the NBER, the US recession began in March of 2001 about a year after the stock market peaked.
CHINA DEFLATION RISKS (Reuters)
“China's manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signaling stubborn deflation risks in the economy…” Story at…
http://www.reuters.com/article/2015/09/10/us-china-economy-inflation-idUSKCN0RA05P20150910
MARKET REPORT / ANALYSIS
- Thursday, the S&P 500 was up about 0.5% to 1952 at
the close. -VIX fell about 5% to 24.98.
-The yield on the 10-year Treasury rose to 2.22%.
While Market Internals remained positive, the new-high/new-low component did not look too great Thursday. That may be foreshadowing a return down but “Tick” would not agree. Tick was up fairly strongly at the close, though, and on a positive day that’s a positive for tomorrow.
I still think the S&P 500 needs to retest the 1868 low before this correction ends.
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 53% Thursday vs. 56% Wednesday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 50-day moving average of advancing stock was 47.9% and that’s still a negative, longer term.
Again, New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-104. (It was -38 Wednesday.) The 10-day moving average of change in the spread fell to +11 Thursday. In other words, over the last 10-days, on average; the spread has INCREASED BY 11 each day. The internals remained positive 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
Thursday, the NTSM long term indicator was HOLD. The VIX indicator is negative; Volume, Sentiment and Price are neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONG-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.
