“The last time the number of Americans applying for unemployment benefits was averaging this low, Richard Nixon was president. Initial jobless claims in the period running from Sept 19 to Sept. 26 rose by 10,000 to a seasonally adjusted 277,000, the Labor Department said Thursday.” Story at…
http://www.marketwatch.com/story/average-jobless-claims-havent-been-this-low-since-richard-nixon-2015-10-01
ISM MANUFACTURING INDEX (MarketWatch)
American manufacturers of goods such as oil rigs, appliances and computers saw the weakest performance in September in more than two years, according to the a survey of industry executives. The Institute for Supply Management said its
http://www.marketwatch.com/story/us-manufacturing-growth-at-two-year-low-ism-data-show-2015-10-01
CRUDE INVENTORY (StreetInsider.com)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.0 million barrels from the previous week. At 457.9 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.
http://www.streetinsider.com/Commodities/Data+Shows+Crude+Inventory+Increased+by+4M+Barrels/10932392.html
DOW DOWN FOR 3RD QUARTER IN A ROW (MarketWatch)
“The Dow Jones Industrial Average has suffered a third-straight quarterly decline for the first time since the Great Recession. This marks just the third time in nearly 40 years that a quarterly losing streak for the blue-chips benchmark stretched at least that long.”
http://www.marketwatch.com/story/dow-to-suffer-rare-3-quarter-losing-streak-2015-09-30
MARKET REPORT / ANALYSIS
-Thursday, the S&P 500 was up about 0.2% to 1924 at the close.
-VIX finished down 8% at 22.55.
-The yield on the 10-year Treasury dipped to 2.04%.
The market needs to break above the recent high (1995) before it would have any credibility that this correction is over. Based on technicals so far, it doesn’t look over to me, but nothing is ever certain. The S&P 500 still needs to test the 1868 level.
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.
This correction is very similar to the 2011 correction. In 2011, the correction lasted 108-trading-days. The current correction has lasted 92-trading-days so far.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 41.8% Thursday vs. 43% Wednesday. (A number below 50% is usually BAD news for the markets. On a longer term, the 50-day moving average of advancing stock rose to 47.1%. That’s remains a negative.
New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-147. (It was -186 Wednesday.) The 10-day moving average of change in the spread fell to -16Thursday. In other words, over the last 10-days, on average; the spread has fallen by 16 each day. The internals switched to 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
Thursday, the NTSM long term indicator was SELL. The Sentiment & Price indicators are neutral. VIX and Volume indicators are negative. VIX and Volume are the highest weighted. Since the Index is 2.7% above the prior low it may be too late to sell now. This indicator shows that the market is not healthy, but we could still see a quick turn-around at the bottom.
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.
If I am able to identify a BUY point before the close when the Index is in the 1868 region, I will post it late in the day. If so, I will buy SSO or QLD in the trading portfolio. These are 2x ETF’s that double market moves up or, dangerously, down. (XIV is also a good play on a falling VIX.) I would also move to a 75% invested position in the Retirement account.
These are high risk moves, so don’t do it unless you have a high tolerance for risk. There were several bottoms in the 2011 correction, but fortunately, the market didn’t fall much further after those false bottoms.
