“Retail sales rose in November as continued low gasoline prices and a slowdown in auto purchases translated to more clothing and electronics buying, providing some hope to retailers looking for a stronger finish to a holiday shopping season that started with a whimper.” Story at…
http://www.wsj.com/articles/u-s-retail-sales-rose-0-2-in-november-1449840874
MICHIGAN SENTIMENT (MarketWatch)
“Consumer sentiment rose for a third straight month, as measured by the closely watched University of Michigan confidence index, but fell slightly short of the gain economists had been expecting. The measure hit 91.8, up 0.5 point, in the preliminary December reading.” Story at…
http://www.marketwatch.com/story/consumer-confidence-rises-university-of-michigan-says-2015-12-11
HAS THE BEAR MARKET STARTED?
You may remember the Story I linked here…
http://navigatethestockmarket.blogspot.com/2015/11/empire-manufacturing-industrial.html
…that I titled "Bearish Call from Lowry Research." In that article, Richard Dickson (Senior Market Strategist at Lowry Research) said that [from Financial Sense] “… he is not yet ready to tell clients to begin aggressively hedging or shorting the market. The reason is that Dickson has not seen the kind of big down day on heavy volume—meaning 90% of the market down with 5-7 billion shares trading hands—that would confirm to him that ‘we are going down and not coming back.’”
We got very large down-volume today, but the overall volume was average for the month and not the big pop in volume that Mr. Dickson mentioned. Still a big volume down-day is a warning. If it is followed by more big-volume, down-days without commensurate big up-volume days we may have to conclude the Bear is here and the top was back in May. So far, I think the odds favor the bear, but we have not seen confirmation yet.
MARKET REPORT / ANALYSIS
-Friday, the S&P 500 collapsed about 1.9% to 2012 at the close.
-VIX fell about 26% to 24.39.
-The yield on the 10-year Treasury fell to 2.14.
The 10-dMA of %-of Stocks Advancing was only 36.1% today. That is below the lowest point in 2009, 2010, and 2011. That number is so low that a bounce is likely. The numbers still look bad for the long-term, but it looks like a bounce for now, based on breadth. Another breadth signal is showing oversold. If we don’t get a bounce soon, this will be one hell of a correction.
The Advance/Decline ratio is still signaling oversold; that’s 3-days in a row. RSI is close to oversold; the Smart Money Index is not. I expect a bounce up, but the trend remains down.
The S&P 500 is now 2.5% below its 200-dMA and the slope of the 200-dMA remains DOWN as of Friday so as noted, the trend is down; whether it will be long-term remains to be seen. The S&P 500 is 2.1% below the 50-dMA; that’s 3-days below the 50-dMA. That provides more confirmation of a downtrend.
Today’s new, recent-low of 2012 is not a successful test when compared to the 13 Nov 2015 prior low of 2023, so it looks like there is more downside ahead by that check too.
A 50% down retracement would put the market at about 1990. From the S&P 500 chart it looks like an important level is around 1930-1980. Those levels will be watched for a possible buy signal. A retest of the 25 Aug low is still possible.
I have 2 indicators that have been very reliable recently, one based on breadth (but not the overbought/oversold ratio) and one based on smart-money; both are still suggesting further downside ahead. As I’ve noted, that may not be a straight-line down since a bounce is entirely possible next week.
MARKET INTERNALS (NYSE DATA)
(I am getting data from a new site. Some of their 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 36.1% Friday vs. 41.1% Thursday. (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 48.7%. A value below 50% indicates a down trend.
The McClellan Oscillator (a Breadth measure) remained negative Friday. This indicator is at its lowest value since the 25 Aug recent low on the S&P 500.
New-lows outpaced New-highs Friday. The spread (new-highs minus new-lows) was minus-368. (It was -133 Thursday.) The 10-day moving average of the change in spread was -41 Friday. In other words, over the last 10-days, on average; the spread has decreased by 41 each day. Oddly, Market Internals switched to neutral on volume yesterday (and remained neutral today), but I had a glitch in the numbers and didn't notice until today.
NTSM
Friday, the NTSM long term indicator was HOLD. The Price indicator is positive. Sentiment is neutral; VIX & Volume are negative. This indicator is close to a sell.
This indicator was SELL previously so a sell now would be
relatively meaningless; that explains my invested position.
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%
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.
