“The number of Americans seeking unemployment benefits rose slightly last week yet remained at a low level consistent with solid job growth. Weekly applications for jobless aid rose 3,000 to a seasonally adjusted 267,000, the Labor Department said Thursday. The four-week average, a less volatile figure, declined to 271,750.” Story at…
http://www.sltrib.com/home/2986611-155/us-jobless-claims-tick-up-to
DURABLE GOODS ORDERS (USA Today)
“Orders for long-lasting U.S. manufactured goods dropped in August with weakness in a key category that tracks business investment plans. Orders for durable goods fell 2% last month…” Story at…
http://www.usatoday.com/story/money/business/2015/09/24/durable-goods-orders-manufacturing-august/72705716/
NEW HOME SALES UP (AP reported at CNBC)
“Buoyed by steady job gains and low mortgage rates, Americans purchased new homes in August at the fastest pace in more than seven years. The Commerce Department says new-home sales surged 5.7 percent last month to a seasonally adjusted annual rate of 552,000…” Story at…
http://www.cnbc.com/2015/09/24/us-new-home-sales-soar-top-estimates.html
My cmt: New home sales are followed by many as a recession indicator.
GOOD POSSIBILITY OF BEAR MARKET (Financial Sense)
“There's a good possibility that we see a 20% decline, which is defined as a bear market or slightly more than that. Whether it's cyclical or structural has yet to be determined but for instance if the S&P, which is already down around 10%, were to come down another 10% you'd take it right back to 1600, which, ironically, is the breakout point through the 2000 and 2008 peaks, which was broken through on the upside in 2013. So a pullback to that breakout level would be a perfectly normal cyclical bear market in what presumably would be an ongoing bull market, just as we saw cyclical bear markets in the course of the 1982-2000 bull market.” – Louise Yamada, Technical Research Advisors. Commentary at…
http://www.financialsense.com/contributors/louise-yamada/major-sell-signals
MARKET REPORT / ANALYSIS
-Thursday, the S&P 500 was down about 0.3% to 1932 at the close.
-VIX rose about 6% to 23.47.
-The yield on the 10-year Treasury slipped to 2.12%.
Not much new today. Internals continue to deteriorate and that suggests more downside ahead.
This correction is similar to the 2011 correction. In 2011 the correction lasted 108-days. The current correction has lasted 87-days so far. The 2011 correction was deeper than most with a 19% drop that included an 18% drop at the waterfall (straight-down) portion of the correction. This time the Index was down 12% at the waterfall portion of the correction on 25 August. Bottom line: the most likely scenario is that while the correction may continue, it is not likely to fall much below the 1868 bottom. A re-test of the 1868 level may give us an answer.
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) fell to 48.6% Thursday vs. 49.9% Wednesday. (A number below 50% is usually BAD news for the markets. On a longer term, the 50-day moving average of advancing stock was 46.9%. That’s remains a negative.
New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-340. (It was -222 Wednesday.) The 10-day moving average of change in the spread fell to -24 Thursday. In other words, over the last 10-days, on average; the spread has DECREASED by 24 each day. The internals remained negative 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. Price is positive because this correction is long in the tooth; this particular indicator within the
Price” category has a very low weighting in the overall system. Volume and Sentiment indicators are neutral. VIX is negative. VIX and Volume are the highest weighted.
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.
