-“For Q3 2015, the blended earnings decline is -5.5%. If the index reports a decline in earnings for Q3, it will mark the first back-to-back quarters of earnings declines since 2009.
- The percentage of companies issuing negative EPS guidance is 70% (76 out of 108), which is below the 5-year average of 72%.
-The 12-month forward P/E ratio is 15.9. This P/E ratio is above the 5-year average (14.0) and the 10-year average (14.1).” See FACTSET Earnings Insight at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_10.9.15/view
My cmt: Earnings are the key now; how will investors react? Low earnings are expected. What concerns me is that PE’s are above the 5 & 10-year average. The S&P 500 would have to drop 13% to get the PE back to average recent levels. Will the markets tolerate a high PE with falling earnings? – only if forward guidance is good.
BOA PREDICTS POOR 4TH QUARTER (CNBC)
"Bullish fourth-quarter seasonals do not work this year," said Suttmeier. "When the market has been lower through the third quarter, the fourth quarter tends to follow on that weakness," added Bank of America Merrill Lynch's technical research analyst.” Story at…
http://www.cnbc.com/2015/10/08/this-statistic-suggests-a-90-chance-stocks-will-fall-bofa.html
My cmt: A couple of hours after I saw this on CNBC they had another article that took the other side. They’re as bad as I am!
WORKFORCE RECOVERY? (Advisor Perspectives)
“The three mainstream employment statistics — unemployment, labor force participation and employment-to-population — all document an ongoing economic weakness far deeper than the result of a business cycle downturn.” Commentary at…
http://www.advisorperspectives.com/dshort/updates/Stuctural-Changes-in-Employment.php
My cmt: Interesting piece on employment and what would be needed just to get back to pre-recession levels.
BULL OR BEAR – CORRECTION OVER? (Street Talk Live)
“If you choose the "bearish" view and are wrong, you only miss out on some of the rather limited potential upside from current levels. If you choose the "bullish"view and are wrong, you suffer a real destruction of investment capital. This is a point that is rarely discussed, but is a harsh reality. As I stated last week: ‘Hoping to get back to even’ has never been a successful investment strategy.” – Lance Roberts
http://streettalklive.com/index.php/blog.html?id=2933
MARKET REPORT / ANALYSIS
-Friday, the S&P 500 was up about 0.1% to 2015 at the close.
-VIX finished down about 2% to 17.08.
-The yield on the 10-year Treasury slipped to 2.10%.
The S&P 500 is 2.3% below the 200-dMA (now 2062). That’s a key level to break.
Market Internals and the 5-10-20 Timer are both positive so at this point, the correction looks over to me, for now. The S&P 500 chart seems to agree with this opinion. It made a triple top Wednesday, but closed above that top 3-days straight. Friday the NTSM long-term indicator switched to positive. All indications are that the correction is over. I will increase my stock allocation to 50% Monday, but I wouldn’t be surprised to see a retreat back to the August lows in November or December.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 61% Friday vs. 60% Thursday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 50-day moving average of advancing stocks rose to 50%. It has been steadily improving and Breadth is looking OK.
New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +42. (It was +45 Thursday.) The 10-day moving average of the change in spread fell to +16 Friday. In other words, over the last 10-days, on average; the spread has risen by 16 each day. The internals remained positive 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
Friday, the NTSM long term indicator was BUY. The Price & Volume indicators are positive. The VIX & Sentiment indicators are neutral.
{I have removed the BUY signal Friday because I published a HOLD rating Sunday night and I did not buy on Monday.}
.
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
The plan changed...
