“Retail sales in the U.S. climbed for a second straight month, a sign consumers may be looking past recent volatility in financial markets. The 0.2 percent increase in August followed a 0.7 percent gain in July that was larger than previously reported…” Story at…
http://www.bloomberg.com/news/articles/2015-09-15/retail-sales-in-u-s-increase-as-consumers-unshaken-by-turmoil
INDUSTRIAL PRODUCTION DOWN SHARPLY (Reuters)
“U.S. manufacturing output contracted more than expected in August, dragged down by a sharp fall in auto production that could moderate economic growth in the third quarter. American factories churned out 0.5 percent fewer goods last month, the Federal Reserve said on Tuesday.” Story at…
http://www.reuters.com/article/2015/09/15/us-usa-economy-output-idUSKCN0RF1LH20150915
SCHWAB MARKET PERSPECTIVE (Charles Schwab)
“Stay calm and carry on. Easy to say but hard to do. The US economy remains healthy, and recent stock market volatility has changed very little of that story, so we don’t believe your investment plan should change either. We still think the bull market is intact as global monetary policy is loose, economies aren’t falling off a cliff, and the US consumer is in good shape, supported further by falling commodity prices. Globally, the story is somewhat similar—major economies don’t appear to be falling off a cliff, and investors should turn their attention to the increasingly dominant services side of the global economic ledger.” Commentary at…
http://www.advisorperspectives.com/commentaries/20150914-charles-schwab-schwab-market-perspective-now-what
MARKET REPORT / ANALYSIS
-Tuesday, the S&P 500 was up about 1.3% to 1978 at the close.
-VIX fell about 7% to 22.54.
-The yield on the 10-year Treasury rose to 2.28%.
Market Internals switched to neutral on the market. The McClellan Oscillator was negative yesterday, but switched to positive Tuesday. It is another Breadth indicator that I calculate on a percentage basis. While the raw numbers are different than the McClellan numbers (so I won’t post them) the percentage calculation filters out changes in issues traded over time and yields similar results regarding the direction of the Oscillator. Information can be found here…
http://www.mcoscillator.com/
Together, the “flopping” of these indicators just reflects investor confusion indicated in the chart by a symmetrical triangle – higher lows and lower highs coming to a point. It would be nice to report that that triangle was resolved to the upside today, but volume was quite low (25% below the monthly average on the NYSE) and that is not what it takes to form a breakout. I suspect we’ll have to wait until after the Fed meeting before we get more direction from the market.
The most likely scenario remains that the S&P 500 will retest the 1868 low before this correction ends - no guarantees though. 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 80 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 49% Tuesday vs. 46.4% Monday. (A number below 50% is usually BAD news for the markets. On a longer term, the 50-day moving average of advancing stock was 48.1% and that’s remains a negative.
Again, New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus-61. (It was -103 Monday.) The 10-day moving average of change in the spread rose to minus-3 Tuesday. In other words, over the last 10-days, on average; the spread has DECREASED by 3 each day. The internals switched to neutral on the markets. Confusion reigns!
NTSM
Tuesday, the NTSM long term indicator was HOLD. The VIX indicator is negative. Volume, Sentiment and Price indicators 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.
