“U.S. retail sales barely rose in September and producer prices recorded their biggest decline in eight months, raising further doubts about whether the Federal Reserve will raise interest rates this year. The weak reports on Wednesday were the latest suggestion that the economy was losing momentum in the face of slowing global growth, a strong dollar, an inventory correction and lower oil prices…” Story at…
http://www.reuters.com/article/2015/10/14/us-usa-economy-idUSKCN0S81HC20151014
FED BEIGE BOOK (CNBC)
“Overall, U.S. economic activity continued to expand modestly from mid-August through early October, the Fed said in its Beige Book report of anecdotal information on business activity collected from contacts nationwide. The U.S. central bank said manufacturing conditions were "generally sluggish" with the slowdown in China taking a back seat to the stronger dollar as the most immediate headwind.” Story at…
http://www.cnbc.com/2015/10/14/fed-beige-book-modest-overall-economic-expansion-continues.html
STOCKS ABOVE THEIR 200-dMA.
Only 31% of stocks on the NYSE are above their 200-dMA. This stat reversed direction (now down) recently and that occurred right on its downward trend line suggesting more downside is probable. News remains lackluster so it seems there is little to send the market up.
Chart from…http://www.indexindicators.com/charts/nyse-vs-nyse-stocks-above-200d-sma-params-3y-x-x-x/
MARKET REPORT / ANALYSIS
-Wednesday, the S&P 500 was down about 0.5% to 1994 at the close.
-VIX finished up about 1% to 17.91.
-The yield on the 10-year Treasury slipped to 1.98%. (The Bond Ghouls are getting nervous.)
Walmart was down 10% at 4PM Wednesday based on poor forward earnings guidance. The SPDR Retail ETF (XRT) has not fared well either in the last 3-months. It is down 10% while the S&P 500 is down about 5%. It would seem like retail may be getting worse. This seems odd with gasoline prices remaining relatively low. It suggests that the consumer will not lead us out of the doldrums. We already know that a lot of multi-national companies are being hurt by the strong dollar so if the consumer isn’t buying it is a concern.
The advance-decline ratio shows that an overbought condition remains in place while Relative Strength Indicator (a measure of the size of up-moves –RSI) is not yet overbought. “Overbought” suggests some downside ahead, but it is not a crash indicator.
Bulls should be worried that new-lows outpaced new-highs Wednesday. If that trend continues there will be more downside ahead.
I remain cautious given that there are cross-currents in the signals. Most indicators lean toward “correction over”, but a couple of others suggest otherwise so I am waiting, mostly out of the market. I think the market will drift lower, but I could easily be wrong; I seem to be in the minority.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 60% Wednesday vs.64% Tuesday. (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 49.5%.
In a NEGATIVE REVERSAL, New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus -11. (It was +32 Tuesday.) The 10-day moving average of the change in spread dropped to +17 Wednesday. In other words, over the last 10-days, on average; the spread has risen by 17 each day. The internals remain neutral on the markets.
NTSM
Wednesday, the NTSM long term indicator was HOLD. The Volume indicators is positive. VIX is negative. Price & Sentiment indicators are neutral.
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%
