CASS Information Systems reported that shipments were down 5.1% and expenditures were down 9.1% compared to November of last year. This is not indicative of a healthy economy. See the full report at…
http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
The Dow Transportation Average dropped more than 2% today and is now in bear territory for the ear. DOW Theory has already issued sell signals based on the poor performance of the transportation stocks. There was a time when this signal was suspect, due to airlines in the transportation index. We continue to see real declines in freight though so there is fire along with the smoke.
GOLDEN CROSS (Marketwatch)
“Even with Friday’s selloff, the S&P 500 index is on the verge of passing into territory interpreted by market technicians as a bullish indicator [the] “golden cross,” when the index’s 50-day moving average crosses above its 200-day moving average.
http://www.marketwatch.com/story/technical-analysts-are-spotting-a-bullish-signal-in-the-sp-500-2015-12-18?dist=countdown
In fact the closing numbers showed that the 200-dMA was 2062 while the 50-dMA was 2061, so the S&P 500 did exhibit a bullish “Golden Cross” today. The market wasn’t wrecked when the “Death Cross” (50-dMA below the 200-dMA) occurred so it may not be saved when the opposite “Golden Cross” occurs. At this point, I’ll take any bullish indicator I can get.
MARKET REPORT / ANALYSIS
-Friday, the S&P 500 fell about 1.8% to 2006 at the close.
-VIX rose about 9% to 20.70. A close above 20 is not a good sign.)
-The yield on the 10-year Treasury fell to 2.20.
The S&P 500 remained above 2000 and that seems to be a general support level.
Volume was off the charts high (about 170% above normal) due to Options expiration. You’d have to go back to 19 December of 2014 to find volume as high as Friday. That was the last time we had a major Options expiration day – yes this is an annual occurrence.
When compared to 11 December (the last time the S&P 500 visited the 2012 region on a significant dip) today’s internals are better; the markets are in better condition Friday than they were just last week when there was a big drop. Compared to the 13 Nov prior low the internals are worse, so this is a mixed bag.
The NYSE Adv/Decl Ratio is “Oversold” (a bullish indication), but RSI is not – more mixed bag.
Market Internals have turned down on a 10-dMA basis but the smoothed version has not; it is still pointing up so I am cautiously bullish. I’ll have to wait until Monday to see what’s up – let’s hope it is the market.
Friday was another statistically-significant down-day and that means simply that the price-volume move exceeded my statistical parameters and, in about 60% of the time, that leads to an up-day the next session. It wasn’t true Friday; let’s hope it is Monday.
MARKET INTERNALS (NYSE DATA)
(I am getting data from various sites. Some of the numbers are subject to minor revision later today so the previous day’s numbers may be slightly different than reported previously.)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 39.7% Thursday vs. 42.8% Thursday. (A number below 50% is usually BAD news for the markets. On a longer term, the 150-day moving average of advancing stocks dipped to 48.4%. A value below 50% indicates a down trend.
The McClellan Oscillator (a Breadth measure) declined and remained negative Friday.
New-lows outpaced New-highs Friday. The spread (new-highs minus new-lows) was minus-198. (It was -142 Thursday.) The 10-day moving average of the change in spread was -5 Friday. In other words, over the last 10-days, on average; the spread has decreased by 5 each day. Market Internals remain neutral Friday. Up-volume is still trending slightly up and that is the only reason Market Internals are neutral.
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
Friday, Volume & VIX indicators are sell; Sentiment & Price remain neutral. Volume and VIX are the most reliable so the NTSM analysis is again “SELL.” I will wait and watch the action Monday. If I make a change to my stock-allocation, I’ll try to post it Monday around 1115 AM.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
Thursday I increased my invested position in my retirement account to 50% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP).
At the time I said, “I may not maintain a bullish stance for long; I’ll just see what the indicators have to say and I will move on the short term indicators.” I didn’t expect another reversal Friday so I am disappointed, but the numbers are the numbers. I will wait until Monday to see if a sell is still indicated.
If you wish to review why I moved back into the market Wednesday, see…
http://navigatethestockmarket.blogspot.com/2015/12/housing-starts-building-permits.html
