“Nonfarm payrolls increased 173,000 last month after an upwardly revised gain of 245,000 in July, the Labor Department said on Friday. August's gain was the smallest in five months as the factory sector lost the most jobs since July 2013. The jobs count, however, may have been tarnished by a statistical fluke that has often led to sharp upward revisions to payroll figures for August after initial weak readings.” Story at…
http://www.reuters.com/article/2015/09/04/us-usa-economy-idUSKCN0R40CT20150904
HOURLY EARNINGS / AVERAGE WORKWEEK (Briefing.com)
“…average hourly earnings accelerated, up 0.3% in August from a 0.2% gain in July. The average workweek also expanded to 34.6 hours from 34.5 hours…Another solid, yet unspectacular, jobs report puts the onus on the Fed to raise rates at the September meeting.” Details and charts at:
http://www.briefing.com/Investor/Calendars/Economic/Releases/employ.htm
MARKET REPORT / ANALYSIS
-Friday, the S&P 500 was DOWN about 1.5% to 1921 at the close.
-VIX rose about 8% to 27.76.
-The yield on the 10-year Treasury dipped to 2.13%.
Sentiment has finally started to retreat. Thursday, only 61% of traders in the Rydex funds that I track were bullish. That’s down from 71%-bulls on Wednesday. That’s a huge one-day drop and led to a drop to 72%-bulls on a 5-dMA basis. At the bottom of the 2011 correction, in October 2011, the Sentiment value was 24%-bulls on a 5-dMA basis. Stated another way, 3 out of 4 investors were bearish at the bottom as opposed to nearly 3 out of 4 investors currently bullish. That’s one reason to believe that this correction has ways to go, at least in time if not price.
In the 2011 correction the low was tested 4-times in 3-weeks before dropping 2% lower to make the final low in October. If we follow a similar scenario, it means that the S&P 500 may not fall much lower, but it may still take a month or so to sort out a bottom. So far, the low has been tested once.
The S&P 500 still needs to retest the lows.
The 2011 correction lasted 108-days. The 2015 correction is at day-74.
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.
Friday, market internals turned positive and RSI is very close to an oversold position; there could be a turnaround on Tuesday, but it wouldn’t surprise me to see a negative open.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) was 50% Friday vs. 49% Thursday. (A number below 50% is usually BAD news for the markets. Again, New-lows outpaced New-highs Friday. The spread (new-highs minus new-lows) was minus-124. (It was -20 Thursday.) There were only 7 new-highs Friday.
The 10-day moving average of change in the spread rose to +49, Friday. In other words, over the last 10-days, on average; the spread has INCREASED BY 49 each day. Internals remained neutral on the markets.
The internals turned positive on the markets; but it doesn’t mean that a durable turn-around is underway. It is more likely to be a short term signal. We still need to see a successful test of the prior low.
NTSM
Friday, 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.
