“Activity by U.S. manufacturers declined for a second month in September as tepid demand from overseas and high inventories capped production...Friday's report is another indication that the U.S. economy slowed in the third quarter. Total industrial production, which includes mining and utilities, fell 0.2 percent in September.” Story at…
http://www.cbsnews.com/news/industrial-production-dips-0-2-percent-in-september/
JOLTS REPORT (Newsmax)
“Job openings in the U.S. retreated in August to the second-highest level on record, indicating employment gains will remain steady. The number of positions waiting to be filled dropped to 5.37 million, second only to July’s all-time high of 5.67 million…” Story at…
http://www.newsmax.com/Finance/StreetTalk/job-openings-jolts-labor-turnover/2015/10/16/id/696570/
My cmt: The FED has reported this data since 2000. These are the highest 2-months on record for job openings.
MICHIGAN SENTIMENT
“The University of Michigan’s preliminary consumer sentiment index for this month rose to 92.1, the first advance in four months…” Story at…
http://www.bloomberg.com/news/articles/2015-10-16/consumer-sentiment-in-u-s-exceeds-forecast-as-finances-improve
SKEPTICAL OF THE RALLY (CNBC)
“…it's only a matter of time before the S&P 500 hits the next level of resistance, and investors should be prepared for what could be the start of sharp selling. "A lot of these rallies tend to bring us to a place of complacency before the bear claw may come out again to strike," she warned. "We are skeptical of this rally." – Louise Yamada, Louise Yamada Technical Research Advisors. Commentary at….
http://www.cnbc.com/2015/10/15/bear-claw-will-strike-the-market-again-louise-yamada.html
MAYBE I’M OVEREACTING
…but the length of time without an appreciable increase in price in 2015 is very similar to 2008.
2015 Q3 EARNINGS (Factset)
Excerpt from 16 Oct 2015 Earnings Insight…information based on earnings reports so far…
-“The blended (combines actual results for companies that
have reported and estimated results for companies yet to report) earnings decline
for Q3 2015 is now -4.6%... If this is the final earnings decline for the
quarter, it will mark the first time the index has seen two consecutive
quarters of year-over-year declines in earnings since Q2 2009 and Q3 2009. It
will also mark the largest year-over-year decline in earnings since Q3 2009
(-15.5%).”
-“The blended revenue decline for Q3 2015 is -3.2%. If
this is the final revenue decline for the quarter, it will mark the first time
the index has seen three consecutive quarters of year-over-year revenue declines
since Q1 2009 through Q3 2009.” Earnings Insight Report at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_10.16.15/viewMy cmt: Poor earnings have been anticipated so the markets have not been surprised.
MARKET REPORT / ANALYSIS
-Friday, the S&P 500 was UP about 0.5% to 2033 at the close.
-VIX finished down about 4% to 15.37.
-The yield on the 10-year Treasury remained unchanged at 2.02%.
Friday, both the advance-decline ratio and Relative Strength Indicator (a measure of the size of up-moves –RSI) indicate an overbought condition. “Overbought” suggests some downside ahead.
Up-volume has been declining so a downturn of some sort seems to be coming.
There were options expiring today for ETF’s and that may have clouded stats. Let’s see what happens next week.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 62% Friday vs. 63% Thursday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 50-day moving average of advancing stocks climbed to 50.5%, a good news signal.
New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +37. (It was +19 Thursday.) The 10-day moving average of the change in spread was +26 Friday. In other words, over the last 10-days, on average; the spread has risen by 26 each day. The internals remain neutral 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 and VIX indicators are positive. Sentiment is neutral.
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%
