“Private sector employment increased by 217,000 jobs from October to November…Mark Zandi, chief economist of Moody's Analytics, said, "Job growth remains strong and steady…The economy is fast approaching full employment…." Story at…
http://www.streetinsider.com/ETFs/ADP+Employment+Change+217K+vs+190K+Expected/11119685.html
FED BEIGE BOOK (WSJ)
“The U.S. economy expanded at a modest pace into November
amid rising consumer spending and a tightening labor market, the Federal
Reserve said on Wednesday. The Fed found modest, moderate or steady growth in
10 of its 12 districts…” Story at…http://www.wsj.com/articles/fed-beige-book-reports-modest-growth-1449083069
CRUDE INVENTORIES (MarketWatch)
“Oil futures fell under $41 on Wednesday after U.S. government data revealed that domestic crude supplies climbed for a 10th week in a row.” Story at…
http://www.marketwatch.com/story/crude-prices-slip-as-traders-brace-for-bigger-stockpiles-2015-12-02
YELLEN SPEECH – LOOKS LIKE THEY’RE GOING TO HIKE RATES
(MarketWatch)
“Federal Reserve Chairwoman Janet Yellen on Wednesday
made it pretty clear she’ll support the central bank’s first interest-rate
increase in nine years when policy makers meet in two weeks.” Story at…http://www.marketwatch.com/story/yellen-moves-fed-to-brink-of-december-rate-hike-2015-12-02
MARKET REPORT / ANALYSIS
-Wednesday, the S&P 500 fell about 1.1% to 2080 at the close.
-VIX rose about 8% to 19.91.
-The yield on the 10-year Treasury rose to 2.18.
SHORT TERM: Breadth remains “overbought” per the Adv/Dec Ratio Wednesday and has remained so for 4-straight days. As noted yesterday, that should signal a pullback. RSI was overbought at the recent 3 Nov top of 2110, but the market has not appreciably advanced since then so that’s another short-term, sell-signal.
The McClellan oscillator turned negative Wednesday.
The S&P 500 is 0.7% above the 200-dMA. The slope of the 200-dMA is DOWN as of Wednesday; the next several days will tell whether the markets creep out of this flat/downtrend or fall (Sorry, I had a typo here yesterday).
I expect to see the markets pullback to the 1930-1980 level; but a retest of the August low is always possible, given the overbought conditions and chart patterns. I have 2 indicators, one based on breadth and one based on smart-money, that are still suggesting further downside ahead.
LONG TERM: Sentiment (measured as %-bulls = {bulls/[bulls+bears]} in selected Rydex/Guggenheim funds on a 5-day basis) was 85%-bulls after the all-time S&P 500 high of 2131 on 21 May. (Sentiment peaks after a top since dip-buyers move in late.) Sentiment is suggesting that “The Top” is in for this cycle; sentiment is similar (on a standard deviation basis) to the top in 2000.
The % of new highs on the NYSE was 2.3% at the May top. That is an extraordinarily low number and it too suggests that the top of 21 May was an important top. The %-advancing at the top in 1929 was also 2.3% although the measurement method is slightly different, because not all issues on the NYSE today are stocks.
The charts look a lot like the major tops in 2000 and 2007; another bearish indicator.
The 200-dMA of the S&P 500 is now sloping down and the 150-dMA of %-stocks advancing is 49.5%. Both are bearish long-term.
Small and mid-cap divergence also suggests a major top may have been seen back in May; but the small and midcaps have recently outperformed over the past 5-days or so. If that trend continues perhaps we will see a return to more risk-taking and new-highs for the S&P 500. I doubt it, but it’s best to follow the numbers and see what they suggest rather than making stupid predictions. I continue to be stupid in that regard!
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 55.8% Wednesday vs. 57.3% Tuesday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 150-day moving average of advancing stocks rose to 49.5%. A value below 50% indicates a down trend.
The McClellan Oscillator (a Breadth measure) switched to negative Wednesday.
New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus-60. (It was +51 Tuesday.) The 10-day moving average of the change in spread was +3 Wednesday. 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 due to diminishing up-volume.
NTSM
Wednesday, the NTSM long term indicator was HOLD. The Price indicator is positive. Sentiment, VIX & Volume are neutral. I remain skeptical that this is a good time to get in. My prior blog posts explain the reasoning. The market needs to break out higher before I will be convinced.
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%
I made a rather impulsive sell 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. In fact, I don’t recommend it. 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.
I have been considering increasing stock-investments, but I’d like to see more price movement first.
