“New orders are down sharply and are back in contraction while backlog orders are in a 10th month of contraction. Production soared nearly 20 points in October but reversed most of the gain in November.” Commentary at…
http://globaleconomicanalysis.blogspot.com/2015/11/chicago-pmi-contracts-again-6th-time-in.html
ISM – WORST SINCE 2009 (MarketWatch)
“American manufacturers of goods such as electronics, chemicals and heavy machinery saw their businesses contract in November at the sharpest pace since the end of the Great Recession, reflecting the damage caused by a strong dollar, cheap energy prices and a soft global economy. The Institute for Supply Management said its manufacturing index fell to 48.6% to last month from 50.1% in October…” Story at…
http://www.marketwatch.com/story/manufacturers-suffer-worst-performance-since-2009-ism-finds-2015-12-01
DEBT VS EQUITY (McClellan Publications)
This indicator suggests trouble on the horizon. See commentary at…http://www.mcoscillator.com/learning_center/weekly_chart/debt_vs._equity/
MARKET REPORT / ANALYSIS
-Tuesday, the S&P 500 was up about 1.1% to 2103 at the close.
-VIX fell about 9% to 14.67.
-The yield on the 10-year Treasury dipped to 2.14. (Apparently the Bond Ghouls didn’t get the word that all is well in the markets.)
Breadth is “overbought” per the Adv/Dec Ratio as of Friday and Monday & Tuesday. RSI was overbought at the recent 3 Nov top of 2110, but it is not overbought now.
The first few days of a new month are some of the most bullish days on the stock market. That’s because most investors set their mutual fund purchases early in the month.
The S&P 500 is 1.8% above the 200-dMA. The slope of the 200-dMA is flat as of Tuesday so the next several days will tell whether the markets creep out of this flat/downtrend or power up.
Tuesday was another statistically significant day and that means simply that the price-volume move exceeded my statistical parameters and, in about 60% of the time, that leads to a down-day the next day.
I expect to see the markets pullback some, given the overbought conditions, big up day today and chart patterns. I have 2 indicators, one based on breadth and one based on smart money, that are suggesting further downside ahead.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 57.3% Tuesday vs. 57.5% Monday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 150-day moving average of advancing stocks rose to 49.5%. A value below 50% indicates a down trend.
The McClellan Oscillator (a Breadth measure) remained positive Tuesday.
New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +51. (It was 22 Monday.) The 10-day moving average of the change in spread was +16 Tuesday. In other words, over the last 10-days, on average; the spread has increased by 16 each day. The internals switched to neutral on the markets due to diminishing up-volume.
NTSM
Tuesday, the NTSM long term indicator was BUY. The Price & VIX indicators are positive. Sentiment & 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.htmlThere 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. Today was a good start; will it trigger follow-thru, or selling?
