“New orders for manufactured durable goods in September decreased $2.9 billion or 1.2 percent to $231.1 billion, the U.S. Census Bureau announced today. This decrease, down two consecutive months, followed a 3.0 percent August decrease.” – BLS
“If we exclude transportation...The core measure is down a disappointing -5.3 percent YoY. If we exclude both transportation and defense for an even more fundamental "core", the latest number was…down -7.7 percent YoY.” – Doug Short. Commentary, charts and analysis at…
http://www.advisorperspectives.com/dshort/updates/Durable-Goods-Orders.php
DURABLE GOODS ORDERS FALL (ABC News)
"This is quite disappointing news," said Jennifer Lee, senior economist at BMO Capital Markets. "U.S. business investment is facing many challenges these days and will struggle to register decent growth in quarter four." Story at…
http://abcnews.go.com/Business/wireStory/orders-us-durable-goods-12-percent-september-34759150
CONSUMER CONFIDENCE (Marketwatch)
“The Conference Board Consumer Confidence Index®, which had increased moderately in September, declined in October. The Index now stands at 97.6 (1985=100), down from 102.6 in September.” Story at…
http://www.marketwatch.com/story/the-conference-board-consumer-confidence-index-retreats-2015-10-27
CASE SHILLER (WSJ)
“The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.7% in the 12 months ended in August…” Story at
http://www.wsj.com/articles/u-s-home-price-growth-gains-strength-in-august-case-shiller-says-1445950825
MARKET REPORT / ANALYSIS
-Monday, the S&P 500 was down about 0.3% to 2066 at the close.
-VIX was up about 1% to 15.43. (The Options Boys don’t seem worried.)
-The yield on the 10-year Treasury fell slightly to 2.03%.
There have been hints in the market internals that tend to foreshadow market downturns for the last 2-weeks or so. Today the hints turned into cracks as new-lows outpaced new-highs and the spread was decidedly negative while the McClellan Oscillator turned negative. Even though the Internals I track overall remain neutral, the deterioration suggests the Index is likely to move down from here. How much remains to be seen. The news has been fairly bad (ISM, Fed Manufacturing Reports, Durable Goods, Consumer Confidence) and I am surprised that the markets are holding up as well as they have.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 51.6% Tuesday vs. 51.8% Monday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 50-day moving average of advancing stocks dipped to 49.8%. Below 50% is generally bad for the markets. The McClellan Oscillator switched to negative Tuesday.
New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus-17. (It was +6 Monday.) The 10-day moving average of the change in spread was minus-10 Tuesday. In other words, over the last 10-days, on average; the spread has decreased by 10 each day. The internals remain neutral on the markets, but deteriorated Tuesday.
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
Tuesday, the NTSM long term indicator was BUY. Price, VIX and Volume indicators are positive. Sentiment is neutral. I am not following this guidance for the time being. The NTSM system is a trend following system and other indicators are suggesting we may see a turn down soon: weak up volume (on a 10-day basis) and weak Internals. If we don’t see a pullback soon, I will be buying stocks.
I will wait
before increasing stock holdings; I think there will be a better entry point.
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%
