“North American shipment volume and expenditures dropped for the second month in a row as the summer slowdown hit. The drop in freight spending was sharper than expected, however, as truck spot prices fell lower due to abundant capacity. The decline in shipments did not follow the typical upward movement in August, but given the weak level of new manufacturing orders placed in June and July it is not unanticipated.” The report stated that year-over-year, shipments were down 4.6% and expenditures were down 8%. I have suggested that the Dow Theorists were wrong about the transportation stocks issuing a warning, but this data suggests to me that the transportation segment of the economy is indeed slowing. Press release at…
http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
RATE HIKE? GET ON WITH IT (Hussman Funds)
“Albert Edwards at SocGen strikes the right note, I think:
“The clamour for the Fed not to enact the long-awaited ¼% rate hike next week is growing by the day. Misgivings come not just from reputable mainstream commentators, but now also the World Bank has repeated the IMF’s recent words of caution in advising delay. What a load of nonsense!…the Fed should hike [this] week – because the longer you leave it, the bigger the financial market excesses become, and the bigger the risk of financial dislocation and global recession ensuing. Have we learned nothing from the 2008 Great Recession? Just get on with it!”… [John Hussman, PhD said,] my view is that activist Fed policy is both ineffective and reckless (and the historical data bears this out), and that the Federal Reserve has pushed the financial markets to a precipice from which no gentle retreat is ultimately likely. Similar precipices, such as 1929 and 2000, and even lesser precipices like 1906, 1937, 1973 and 2007 have always had unfortunate endings (see All Their Eggs in Janet’s Basket for a review). A quarter-point hike will not cause anything. The causes are already baked in the cake. A rate hike may be a trigger with respect to timing, but that’s all. History suggests we should place our attention on valuations and market internals in any event. – Hussman Funds, Weekly Market Commentary at …
http://www.hussmanfunds.com/wmc/wmc150914.htm
MARKET REPORT / ANALYSIS
-Monday, the S&P 500 was down about 0.4% to 1953 at the close.
-VIX rose about 5% to 24.25.
-The yield on the 10-year Treasury remained 2.18%.
Market Internals remained negative on the markets so the most likely direction is down. 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 79 trading-days since the top.
Only 24% of all stocks on the NYSE are above their 200-dMA as of Friday. No surprise there; the S&P 500 is nearly 6% below its 200-dMA.
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 46.4% Monday vs. 49.7% Friday. (A number below 50% is usually BAD news for the markets. On a longer term, the 50-day moving average of advancing stock was 47.4% and that’s remains a negative.
Again, New-lows outpaced New-highs Monday. The spread (new-highs minus new-lows) was minus-103. (It was -124 Friday.) The 10-day moving average of change in the spread rose to minus-9 Monday. In other words, over the last 10-days, on average; the spread has DECREASED by 9 each day. The internals reversed to negative on the markets.
NTSM
Monday, 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.
