FOMC Minutes … Housing Starts/Permits … Crude Inventories … Stock Market Analysis

FOMC MINUTES (CNBC)
“After a summer and early fall that saw the Fed rattled by U.S. market volatility and a sell-off in China, "most" participants felt conditions for a rate hike "could well be met by the time of the next meeting," minutes of the Fed's Oct. 27-28 meeting released on Wednesday said.” Story at…
http://www.cnbc.com/2015/11/18/most-participants-at-fed-meeting-thought-december-hike-appropriate-minutes.html
My cmt: Looks like the 1^st hike is coming in December. Markets didn’t react to the news.

HOUSING STARTS DOWN / PERMITS UP (Reuters)

“U.S. housing starts in October fell to a seven-month low, weighed down by a steep decline in the construction of multi-family homes, but a surge in building permits suggested the housing market remained on solid ground.” Story at…
http://www.reuters.com/article/2015/11/18/us-usa-economy-idUSKCN0T71UQ20151118#LWk2rheRzFjQyDqE.97
 
CRUDE INVENTORIES (24/7 Wall Street)
“The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 300,000 barrels last week, maintaining a total U.S. commercial crude inventory of 487.3 million barrels.” Story at…
http://247wallst.com/energy-economy/2015/11/18/crude-oil-price-slips-as-inventory-report-shows-modest-gain/
 
MARKET REPORT / ANALYSIS        
-Wednesday, the S&P 500 was up about 1.6% to 2084 at the close.
-VIX was fell about 10% to 16.88.
-The yield on the 10-year Treasury rose slightly to 2.27.
 
The S&P 500 Index finished about 1% above the 200-dMA, but it may not stay there too long.
 
Wednesday was another statistically significant day and that means simply that the price-volume move exceeded my statistical parameters and, in about 60% of the time, that leads to a down-day the next day. In the last 3-weeks there have been 6- statistically significant days.  That is typical of short-term topping action.
 
My guess is that the market moves down from here, perhaps in a hurry. It may retest the August low of 1868. Other possible support levels are: The 50-dMA on the S&P 500 is 2008. A 50% down retracement would put the market at about 1990. The chart looks like an important level is around 1930-1940. All of those levels should be watched for a possible buy signal.

 

While I am bearish in the long term, it is possible that the markets could bounce up and make a run at new-highs or news (such as improved earnings/revenues) will improve my outlook.  I will have a better idea about that if there is a retest of the 1868 level.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 45% Wednesday vs. 41.3% Tuesday.  (A number below 50% is usually BAD news for the markets.  On a longer term, the 150-day moving average of advancing stocks climbed to 49.3%. A value below 50% indicates a down trend.  
 
The McClellan Oscillator (a Breadth measure) remained negative Wednesday; the Advance/Decline Index was “oversold” yesterday, but it is not today.
 
New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus-54. (It was -94 Tuesday.)   The 10-day moving average of the change in spread was minus-12 Wednesday.  In other words, over the last 10-days, on average; the spread has decreased by 12 each day.  The internals switched to neutral on the markets because up volume is now increasing on a smoothed 10-day basis.

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         
Wednesday, the NTSM long term indicator was BUY. The Price & VIX indicators are positive.  Sentiment and Volume indicators are neutral. I remain skeptical that this is a good time to get in.  My prior blog posts explain the reasoning.

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
All cash: G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 100%
I made a rather impulsive decision. For my reasons (or lack of reason) see “My Invested Stock Position” in my prior blog at...
http://navigatethestockmarket.blogspot.com/2015/11/factset-earnings-cass-freight-index.html
There have been enough major top indicators recently to warrant more caution than usual.
 
One needn’t be “all-out” to be well protected if there is a bear market. For example: With 30% invested in the stock market, one would only lose 15% of the portfolio if the market were to be cut in half; one would have plenty to invest at the bottom and 30% in stocks hedges the bet if the markets go up.