“New U.S. applications for unemployment benefits last week held steady at levels consistent with sustained labor market strength that could encourage the Federal Reserve to raise interest rates next month.” Story at…
http://www.reuters.com/article/2015/11/12/us-usa-economy-idUSKCN0T11M020151112#HWt81f60Rz7Z7I7j.97
My cmt: The DOL press release stated, “In the week ending November 7, the advance figure for seasonally adjusted initial claims was 276,000, unchanged from the previous week's unrevised level. The 4-week moving average was 267,750, an increase of 5,000 from the previous week's unrevised average of 262,750.”
JOLTS (Bloomberg)
“Job openings in the U.S. climbed in September to the second-highest on record, a sign the labor market continues to strengthen. The number of positions waiting to be filled increased by 149,000 to 5.53 million…” Story at…
http://www.bloomberg.com/news/articles/2015-11-12/job-openings-in-u-s-increased-in-september-to-5-53-million
CRUDE INVENTORIES (WSJ)
“Oil prices fell Thursday as U.S. inventory data showed a seventh straight increase in U.S. supplies. U.S. crude inventories rose by 4.2 million barrels last week…” Story at…
http://www.wsj.com/articles/oil-prices-rebound-slightly-1447324073
RETAIL TROUBLE (Financial Times)
“Macy’s cut its earnings forecast for the year, ratcheting down its range for adjusted earnings to between $4.20 and $4.30 a share from $4.70 and $4.80.” Story at…
http://help.ft.com/tools-services/copyright-policy/#axzz3rEZTRXMk
My cmt: On a percentage basis, they are forecasting a drop of more than 10% in earnings for this year. Sales dropped 5.2% this quarter alone. KOHLS reported good earnings and that helped a bit, but Nordstrom fell 15% in after-hours trading as their earnings were about 20% below expectations.
TRANSPORTATION IN TROUBLE (Cass Information Systems)
“The number of freight shipments dropped 4.7 percent from September. The freight shipments index now sits at its lowest October level since 2011. This month’s decline was much sharper than in recent years and can be directly correlated to falling imports and exports as well as decreased domestic manufacturing levels.”
My cmt: Year over year shipments were down 5.3% and expenditures were down 8.7%. Press release on the CASS Freight Index at…
http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
My cmt: I am not an economist. I generally try not to even guess what pieces of economic news means about the overall economy. I can say this, freight shipments are headed the wrong way (and have been for several months) – this can’t be good for the markets.
MARKET REPORT / ANALYSIS
-Thursday, the S&P 500 was down about 1.4% to 2046 at the close.
-VIX was up about 14% to 18.37.
-The yield on the 10-year Treasury dipped to 2.32.
Dow Theory uses the Transportation stocks and compares their action to the Dow Jones Index. In theory, transportation stocks are more sensitive to the economy so they should lead in a market decline. A Dow sell signal was triggered during the recent August stock decline. This was questioned by some, and in the past, I had doubts too.
Back in June I wrote: “Once
again, Dow Theory is wrong. Freight
shipment volume and payments are not indicating a slowdown; weak transportation
stocks (the basis for Dow Theory) are sending a false signal on the industrial
health of the US economy. If someone says weak Trannies are signaling a
downturn in the stock market, ignore them.” At the time, the slowdown in
transportation stocks was due to weak airlines.
Now? Time to listen to Dow Theory.
The CASS Freight Index, discussed above, is clear: transportation is in trouble and has fallen for several months in a row. This isn’t the first time I have noted that freight shipments have been heading down; this is the third month in a row. This can’t be good for the markets.
The S&P 500 Index dropped nearly 1% below the 200-dMA, Thursday. This can’t be good for the markets.
Market Internals continue to point down, but not all indicators do. Thursday was a statistically significant down-day and that means simply that the price-volume move exceeded my statistical parameters and, in about 62% of the time, that leads to an up-day the next day. We’ve also had 6 down-days in the last 7 so expect a bounce Friday; however, my longer term guess is that the market moves down over the next couple of weeks, but perhaps not more than 3% lower. I’ll guess more than 3% if VIX keeps moving higher. I really don’t know; a retest of the 25 August low is always possible.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 46% Thursday vs. 48% Wednesday. (A number below 50% is usually BAD news for the markets. On a longer term, the 150-day moving average of advancing stocks slipped to 49.1%. (Lowry Research considers the 150-day advance decline time frame to be a critical measure of longer-term, market health.) The McClellan Oscillator (a Breadth measure) remained negative Thursday.
New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-170. (It was -56 Wednesday.) The 10-day moving average of the change in spread was minus-21 Thursday. In other words, over the last 10-days, on average; the spread has decreased by 21 each day. The internals switched to negative on the markets.
NTSM
Thursday, the NTSM long term indicator was HOLD. The Price indicator is positive. VIX, Volume and Sentiment are neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONAll cash: G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 100%
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
