“More Americans applied for unemployment benefits last week, but applications remain at historically near low levels in a positive sign for the U.S. economy amid a broader global slowdown…weekly applications for unemployment aid rose 12,000 to a seasonally adjusted 282,000…” Story at:
http://www.cbsnews.com/news/jobless-claims-rise-but-remain-at-a-healthy-level/
ISM SERVICES
“The Institute for Supply Management said its services index fell to 59 last month from 60.3 in July, which was its highest since August 2005.” Story at:
http://www.cnbc.com/2015/09/03/ism-non-manufacturing-index-hits-59-in-august-vs-581-estimate.html
My cmt: 59 is still a very good number. Anything above 50 represents expansion.
THIRD RED FLAG FOR A BEAR MARKET (Financial Sense)
“Currently, the S&P 500 has broken below its 12-month moving average and will likely attempt to get back above in the weeks and months ahead (sentiment and historical patterns put odds at later this year or early 2016…). If the market fails to do so, our third red flag will be raised, which heightens the risk of an extended decline.” – Cris Sheridan. Commentary at…
http://www.financialsense.com/contributors/cris-sheridan/signs-watch-major-peak-bear-market
CANADA IN RECESSION (Global Economic Analysis)
“Canada fell into a recession in the first half of the year, government data confirmed Tuesday…It remains to be seen if a US recession starts this year or not. Spectacular auto sales and modest home building have kept the economy trudging along. However, the US is not going to decouple from a slowing global economy forever. The idea is as silly as the 2008 notion that China would decouple from the US economy.” – Mike Shedlock. Commentary at…
http://globaleconomicanalysis.blogspot.com/2015/09/canada-in-recession-with-two.html
MARKET REPORT / ANALYSIS
-Thursday, the S&P 500 was up about 0.1% to 1951 at the close.
-VIX fell about 2% to 25.61.
-The yield on the 10-year Treasury dropped to 2.17%.
The S&P 500 still needs to retest the lows.
The 2011 correction lasted 108-days. The 2015 correction is at day-73.
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, a 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 49% Thursday vs. 45% Wednesday. (A number below 50% is usually BAD news for the markets. Again, New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-20. (It was -61 Wednesday.) There were only 6 new-highs Thursday.
The 10-day moving average of change in the spread rose to +32, Thursday. In other words, over the last 10-days, on average; the spread has INCREASED BY 32 each day. Internals remained neutral on the markets.
The internals improved and may even turn positive soon. The internals faked out the markets during the 2011 correction too, so even if the internals improve, it doesn’t mean that a durable turn-around is underway. It is more likely to be a very short term signal.
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 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.
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%
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.
