“Companies in the U.S. hired fewer people in August and September, but they aren’t firing more workers at the same time. Initial jobless claims in the period running from Sept 26 to Oct. 3 fell by 13,000 to a seasonally adjusted 263,000, marking the lowest level since mid-July...” Story at…
http://www.marketwatch.com/story/jobless-claims-fall-to-lowest-level-since-midsummer-2015-10-08
FOMC MINUTES (WSJ)
“Federal Reserve officials held off on raising short-term interest rates at their September policy meeting because they had worries about when inflation would return to 2% after running below their official target for more than three years…” Story at…
http://www.wsj.com/articles/fomc-minutes-fed-held-off-on-rate-increase-amid-worries-about-low-inflation-1444327409
My cmt: The S&P 500 spiked at the 2PM release, and was strong all afternoon. It doesn’t seem to mean much to me. The expectation remains for a December rate hike. Perhaps investors are counting on more FED support for the markets.
RUSSIA ATTACKS SYRIAN REBELS (Reuters)
“Syrian troops and militia backed by Russian warplanes mounted what appeared to be their first major coordinated assault on Syrian insurgents on Wednesday…” story at…
http://www.reuters.com/article/2015/10/08/us-mideast-crisis-syria-strikes-idUSKCN0S10BI20151008
My cmt: This has potential to upset stock markets if conditions heat up.
MARKET REPORT / ANALYSIS
-Thursday, the S&P 500 was up about 0.9% to 2013 at the close.
-VIX finished down about 5% to 17.42.
-The yield on the 10-year Treasury rose to 2.11%.
Market Internals and the 5-10-20 Timer are both positive so at this point, the correction looks over to me (and we never had the “successful test” that I expected). The S&P 500 chart seems to agree with this opinion. It made a triple top Wednesday, but closed above that top yesterday and today.
Still, there is an odd indicator I track and that is volume in unchanged issues on the NYSE. Thursday it was extremely high. It has only been higher once or twice over the past 5-years. That’s a bearish indicator, but what it really means is that investors were confused today. I think I am one of them. Earnings season is just getting started so I looked at a few companies whose names I recognized: Monsanto, Alcoa, Dominos, Pepsi and just for kicks, China Xinga Fashion. Revenues were generally down 10% or so, except for China Xinga Fashion where revenues were down nearly 50%. Earnings were also uniformly ugly with Pepsi and Alcoa down huge. Now maybe this was already baked into the price of those stocks and it’s meaningless, but it bothers me enough to wait a few more days before I jump back in this stock market with long-term money. I will, however, trade the trend with short-term funds when the opportunity arises.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 60% Thursday vs. 56% Wednesday. (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 49.9%. It has been steadily improving and Breadth is looking OK.
New-highs outpaced New-lows Thursday. The spread (new-highs minus new-lows) was +45. (It was +27 Wednesday.) The 10-day moving average of the change in spread rose to +39 Thursday. In other words, over the last 10-days, on average; the spread has risen by 39 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
Thursday, the NTSM long term indicator was HOLD. The Price & Volume indicators are positive. The VIX indicator is negative. Sentiment is neutral.
I actually think the market is a BUY now based on the 5-10-20 Timer (a trend following system that gives a buy when the 5-dMA and 10-dMA are both above the 20-dMA.) and the Market Internals that are positive. I explained above in the Market Analysis paragraph why I am not buying Friday.
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%
