Wholesale Inventories … Stock Market Analysis

WHOLESALE INVENTORIES (Reuters/CNBC)
“U.S. wholesale inventories rose more than expected in September, suggesting the third-quarter economic growth estimate could be revised higher. The Commerce Department said on Tuesday wholesale inventories increased 0.5 percent…” Story at…
http://www.cnbc.com/2015/11/10/wholesale-inventories-rise-05-in-september-versus-expectations-for-01-gain.html
 
MARKET REPORT / ANALYSIS        
-Tuesday, the S&P 500 was up about 0.2% to 2082 at the close.
-VIX was down about 7% to 15.29.
-The yield on the 10-year Treasury dipped to 2.32%.
 
The S&P 500 remains less than 1% above its 200-dMA.  It will be important to see if that can hold above the 200-dMA. My longer term guess is that the market moves down over the next couple of weeks, but perhaps not more than 5-8%.
 
I keep hearing that the markets are waiting to see what the Fed will do; I doubt it. The high on the S&P 500 was 2131 on 21 May 2015. The Index was only 2% lower at 2091 on 29 Dec 2014. Thus, the S&P 500 has essentially gone nowhere for 10-months. That stall has not been caused by the Fed. Earnings and revenues have declined and the weak earnings/revenue situation may take at least one more quarter to resolve and possibly longer. If there are further declines in earnings, the markets will get very ugly; good news could bring a rally. That’s why investors are waiting.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 51.6% Tuesday vs. 48.5% Monday.  (A number above 50% is usually GOOD news for the markets.  On a longer term, the 150-day moving average of advancing stocks remained 49.3%. (Lowry Research considers the 150-day advance-decline time frame to be a critical measure of market health.) The McClellan Oscillator (a Breadth measure) remained negative Tuesday.
 
New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus-55. (It was -58 Monday.)   The 10-day moving average of the change in spread was +2 Tuesday.  In other words, over the last 10-days, on average; the spread has increased by 2 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         
Tuesday, 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 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
All cash: G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 100%
For my reasons (or lack of reason) see yesterday’s blog.