JOBLESS CLAIMS (Bloomberg)
“The number of applications for unemployment benefits in
the U.S. climbed last week to a two-month high, a sign of more moderate labor
market progress. Initial jobless claims increased by 11,000 to 276,000 in the
week ended March 26…” Story at…
http://www.bloomberg.com/news/articles/2016-03-31/initial-jobless-claims-in-u-s-rose-last-week-to-two-month-high
CHICAGO PMI (Advisor Perspectives)
“Chief Economist of MNI Indicators Philip Uglow said,
"’The most significant result from the March survey is the pick-up in the
Employment component which has remained weak for much of the past year. Looking
through some of the recent volatility, the data are consistent with steady, not
spectacular, economic growth in the US.’" Commentary and charts at…
http://www.advisorperspectives.com/dshort/updates/Chicago-PMI
PEAK IN CORPORATE EARNINGS (Jesse Felder’s Tumblr)
“…corporate earnings are one of the most popular ways to
value equities thus the sustainability of record-high profit margins should be
an issue of great concern to investors. If profit margins revert to historical
averages, earnings-based valuation measures investors are using to justify
investment in equities today could quickly go against them making stocks appear
much more expensive than they do currently. And this process may now be
underway.” Commentary at…
http://jessefelder.tumblr.com/post/141970540550/we-may-have-just-witnessed-a-generational-peak-in
STOCK MARKET ANALYSIS
I’ll have to skip the analysis today – it’s a busy
one. As of 3PM Thursday the S&P 500
was dropping and volatility (VIX) was increasing. The long-term NTSM signal remained BUY; short
term indicators, Money Trend and the Breadth-Index Top Indicator, are
suggesting a pull-back now.
My separate Market Internal indicator is positive on the
markets as of 3PM, but that might switch to neutral if the market continues
down. This indicator is slow to react
and tends to be more of a follower.
Overall I remain bearish in the near-term and long-term,
at least until we get news that would change the long-term view. Company earnings will be the big test.
Thursday, March 31, 2016
Wednesday, March 30, 2016
ADP Employment … Crude Inventories … ADS Business Conditions Declining … Stock Market Analysis
ADP EMPLOYMENT (MarketWatch)
“All indications are that the job machine will remain in high gear,” said Mark Zandi, chief economist of Moody’s Analytics, which prepares the report using ADP’s data.” Story at…
http://www.marketwatch.com/story/adp-reports-200000-private-sector-jobs-added-in-march-2016-03-30-81032114
ADP said job growth was 200,000 overall.
CRUDE INVENTORY (24/7Wall St)
“U.S. commercial crude inventories increased by 2.3 million barrels last week, maintaining a total U.S. commercial crude inventory of 534.8 million barrels. The commercial crude inventory stands at historically high levels for this time of year, according to the EIA.” Story at…
ADS BUSINESS CONDITIONS FALLING (Philadelphia FED)
“The Aruoba-Diebold-Scotti business conditions index is
designed to track real business conditions at high frequency. Its underlying
(seasonally adjusted) economic indicators (weekly initial jobless claims;
monthly payroll employment, industrial production, personal income less
transfer payments, manufacturing and trade sales; and quarterly real GDP) blend
high- and low-frequency information and stock and flow data.” Chart from the
Philadelphia FED at…
https://www.philadelphiafed.org/research-and-data/real-time-center/business-conditions-index/
MARKET REPORT / ANLYSIS
-Wednesday, the S&P 500 was up about 0.4% to 2064 at the close.
-VIX fell about 2% to 13.56.
-The yield on the 10-year Treasury rose to 1.83%
Volume remained low today, about 15% below the monthly average. Given that the month included Easter with its associated low volume, bulls must be concerned that volume has not picked up as this rally has progressed. The norm is that volume starts low at a bottom, because traders don’t believe it, and then climbs as the rally gets going. This time volume has remained low. Currently, unchanged volume is very high – that shows some confusion on the part of investors. Up volume finally turned up, but will it remain up?
The Overbought/Oversold Ratio remained “Overbought” Wednesday and RSI (Relative Strength Index) was again overbought.
My Breadth Index Top Indicator tracks breadth vs. the S&P 500. It turned negative today. It called the top in May, July, November and December 2015 and July, September and November of 2014. In other words, it has been very reliable recently. I’d say the top is very near if not today.
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator is neutral at this point. I continue to hold short positions mostly in SH and some in QID.
MARKET INTERNALS (NYSE DATA)
(I am getting data from various sites. Some of the numbers are subject to minor revision so the previous day’s numbers may be slightly different than reported yesterday.)
The 10-day moving average of the percentage of stocks advancing (NYSE) is 59.7% Wednesday vs. is 56% Tuesday. (A number above 50% is usually GOOD news for the markets.)
On a longer term, the 150-day moving average of advancing stocks climbed to 51.8%. A value above 50% generally indicates an up-trend, but the slope of the 200-dMA is still down, so the trend must still be considered down. The McClellan Oscillator (a Breadth measure) was higher and remained positive.
New-highs again outpaced New-lows. The spread (new-highs minus new-lows) was +213 Wednesday. (It was +194 Tuesday.) The 10-day moving average of the change in spread rose to +17. In other words, over the last 10-days, on average; the spread has INCREASED by 17 each day. Market Internals switched to positive on the markets.
NTSM
Wednesday, Price, Volume & VIX were positive. Sentiment was neutral. The long-term NTSM indicator is BUY. I have not followed the guidance yet. My numbers suggest that the Index is topping out. I have been saying that for a while as the market has moved up; but there are some topping indicators (RSI & the Breadth Index Top Indicator suggest top real soon. We’ll see.
On 30 Dec I reduced my invested position in my retirement account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP) and on 15 Jan I reduced stock allocation to zero in long-term accounts.
The S&P 500 peaked in Mid-May and has not been able to break higher in the past 10-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html
“All indications are that the job machine will remain in high gear,” said Mark Zandi, chief economist of Moody’s Analytics, which prepares the report using ADP’s data.” Story at…
http://www.marketwatch.com/story/adp-reports-200000-private-sector-jobs-added-in-march-2016-03-30-81032114
ADP said job growth was 200,000 overall.
CRUDE INVENTORY (24/7Wall St)
“U.S. commercial crude inventories increased by 2.3 million barrels last week, maintaining a total U.S. commercial crude inventory of 534.8 million barrels. The commercial crude inventory stands at historically high levels for this time of year, according to the EIA.” Story at…
ADS BUSINESS CONDITIONS FALLING (Philadelphia FED)
“The Aruoba-Diebold-Scotti business conditions index is
designed to track real business conditions at high frequency. Its underlying
(seasonally adjusted) economic indicators (weekly initial jobless claims;
monthly payroll employment, industrial production, personal income less
transfer payments, manufacturing and trade sales; and quarterly real GDP) blend
high- and low-frequency information and stock and flow data.” Chart from the
Philadelphia FED at…MARKET REPORT / ANLYSIS
-Wednesday, the S&P 500 was up about 0.4% to 2064 at the close.
-VIX fell about 2% to 13.56.
-The yield on the 10-year Treasury rose to 1.83%
Volume remained low today, about 15% below the monthly average. Given that the month included Easter with its associated low volume, bulls must be concerned that volume has not picked up as this rally has progressed. The norm is that volume starts low at a bottom, because traders don’t believe it, and then climbs as the rally gets going. This time volume has remained low. Currently, unchanged volume is very high – that shows some confusion on the part of investors. Up volume finally turned up, but will it remain up?
The Overbought/Oversold Ratio remained “Overbought” Wednesday and RSI (Relative Strength Index) was again overbought.
My Breadth Index Top Indicator tracks breadth vs. the S&P 500. It turned negative today. It called the top in May, July, November and December 2015 and July, September and November of 2014. In other words, it has been very reliable recently. I’d say the top is very near if not today.
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator is neutral at this point. I continue to hold short positions mostly in SH and some in QID.
MARKET INTERNALS (NYSE DATA)
(I am getting data from various sites. Some of the numbers are subject to minor revision so the previous day’s numbers may be slightly different than reported yesterday.)
The 10-day moving average of the percentage of stocks advancing (NYSE) is 59.7% Wednesday vs. is 56% Tuesday. (A number above 50% is usually GOOD news for the markets.)
On a longer term, the 150-day moving average of advancing stocks climbed to 51.8%. A value above 50% generally indicates an up-trend, but the slope of the 200-dMA is still down, so the trend must still be considered down. The McClellan Oscillator (a Breadth measure) was higher and remained positive.
New-highs again outpaced New-lows. The spread (new-highs minus new-lows) was +213 Wednesday. (It was +194 Tuesday.) The 10-day moving average of the change in spread rose to +17. In other words, over the last 10-days, on average; the spread has INCREASED by 17 each day. Market Internals switched to positive 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
Wednesday, Price, Volume & VIX were positive. Sentiment was neutral. The long-term NTSM indicator is BUY. I have not followed the guidance yet. My numbers suggest that the Index is topping out. I have been saying that for a while as the market has moved up; but there are some topping indicators (RSI & the Breadth Index Top Indicator suggest top real soon. We’ll see.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONOn 30 Dec I reduced my invested position in my retirement account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP) and on 15 Jan I reduced stock allocation to zero in long-term accounts.
The S&P 500 peaked in Mid-May and has not been able to break higher in the past 10-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html
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