“New U.S. applications for unemployment benefits last week recorded their largest increase in eight months, but remained at levels consistent with a fairly healthy labor market…Initial claims for state unemployment benefits rose 16,000 to a seasonally adjusted 276,000 for the week ended Oct.31, the Labor Department said.” Story at…
http://www.reuters.com/article/2015/11/05/us-usa-economy-idUSKCN0SU1YP20151105#SGICsL20bEbd23ut.97
IT’S DEBATE SEASON SO TIME FOR A BULL VS. BEAR DEBATE.
BEAR…
-Small caps are under-performing …
-Mid-caps are starting to underperform
-Only 40% of stocks are above their 200-dMA …
-Margin Debt at extremes …
-Corporate Profits to GDP Ratio extreme and falling …
-Falling Revenues and Earnings …
-Continuing China troubles …
-Strong dollar …
-Charts look toppy – long stall is similar to 2000 and 2007 …
-Breadth is declining …
-100-dMA of up-volume is falling…
-Secular Bear Market is still on – the year 2000 NASDAQ Composite high has not been significantly breached …
-Rydex Sentiment is high …
-ISM & Fed Manufacturing are Trending Down …
-At the top in 1929 only 2% of stocks made new-highs; only 2.5% made new-highs at the recent top in May 2015.
BULL…
The FED continues to follow ZIRP (Zero Interest Rate Policy) and that forces Grandma to buy stocks rather than Treasury Bonds.
-And the winner is? Assign 1-point for each Bear comment; 1000 pts for each Bull comment.
An initial FED hike does not normally bring on a bear market, but there are plenty of other technical indicators that are worrisome.
CHINA WORSE THAN MOST PEOPLE THINK (Bloombergview)
“Chinese electricity usage is growing at more like 1 percent. Rail freight traffic, though volatile, has suffered some dizzying drops in recent months. These are traditional proxies for heavy industry output. That they are barely growing, if at all, implies that much of Chinese industry has ground to a halt... I wouldn’t bet on a quick bounce-back of Chinese growth. At least, not a real one.” Story at…
http://www.bloombergview.com/articles/2015-11-03/china-s-slump-might-be-much-worse-than-we-thought
MARKET REPORT / ANALYSIS
-Thursday, the S&P 500 was down about 0.1% to 2100 at the close.
-VIX was down about 3% to 15.05.
-The yield on the 10-year Treasury rose to 2.25%.
My guess is that the market moves down over the next couple of weeks. We’ll see.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 52.4% Thursday vs. 55% Wednesday. (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 53.5%. The 100-dMA of advancing stocks dipped to slightly below 50%. The McClellan Oscillator (a Breadth measure) remained positive Thursday.
New-highs outpaced New-lows Thursday. The spread (new-highs minus new-lows) was +26. (It was +61 Wednesday.) The 10-day moving average of the change in spread was +3 Thursday. In other words, over the last 10-days, on average; the spread has increased by 3 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 BUY. Price and VIX indicators are positive. Volume and Sentiment are neutral. I am not following this guidance for the time being; I am waiting for a better entry point. I am getting tired of repeating this, but a pullback may be in the works; I’m guessing a 5-8% drop.
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%
