“U.S. manufacturers barely grew in April and there’s little sign of a broad pickup in business anytime soon, a survey of executives found. The Institute for Supply Management said its manufacturing index fell to 50.8% last month from 51.8% in March.” Story at…
http://www.marketwatch.com/story/ism-manufacturing-index-falls-to-508-in-april-2016-05-02
CONSTRUCTION SPENDING (24/7 Wall Street)
“The U.S. Census Bureau reported Monday morning that construction spending in March rose by 0.3% to an estimated seasonally adjusted annual rate of $1.137.5 trillion from the downwardly revised estimate of $1.133.6 trillion in February.” Story at…
http://247wallst.com/housing/2016/05/02/new-construction-spending-up-slightly-in-march/
The reported number is 8% higher than March 2015
“When I look at the market in the chart below, I see three things:
A. The market has continued its rise as of late
B. It is doing so on overbought and negative-trending momentum
C. It has done so on weakening volume.
...it seems to
me that momentum is shifting negative all while volume is starting to pick up
some steam.” – Adam D. Koos, CFP
MARGIN DEBT STILL SUGGESTS PPROBLEMS (The Felder Report)
“…if you think if margin debt as a simple indicator of potential supply and demand for stocks (when borrowing is low there is great potential demand and vice versa), this should have you worried about another bear market. And the statistics bear this out.” Commentary at…
https://www.thefelderreport.com/blog/
MARKET REPORT / ANALYSIS
-Monday, the S&P 500 was up about 0.8% to 2081 at the close.
-VIX was down about 7% to 14.68.
-The yield on the 10-year Treasury rose to 1.87%.
The first 4-days of a new month are usually up due to mutual fund inflows associated with automatic investments and we got it today. The size of the up-move Monday was statistically significant and that means that the price-volume move UP exceeded my statistical parameters and, in about 60% of the time, that leads to a down-day the next day (Tuesday). Given that the up-day occurred near the recent highs (going back to November), I give it more credence that the future is more likely to be down (at least in the short-term).
The S&P 500 cleared its “overbought” status when using the old tried and true Overbought/Oversold Ratio (utilizing advance decline data) - the reason? The %-of advancing stocks continues to slowly retreat and that is a negative for the market, at least in the short-term. Up-volume has been falling, too, for the last 2-weeks.
The slope S&P 500, 200-dMA is still falling; the “Golden Cross” with the 50-dMa crossing above the 200-dMA remains. The Golden Cross is a bullish indication, but it has not generated much enthusiasm since it appeared 5-days ago.
My snapshot sum of 16 indicators, of which only about
half are included in the NTSM long-term or Market Internals trend followers
that I mention regularly, is currently -2. It was +8 just 7-trading days ago. (I
assigned +1 to bullish indicators and -1 to bearish indicators.) Except for big
reversals, this isn’t a great indicator, but it does show recent market
deterioration.
All in all, there appears to be a slight downside bias indicated for this week.
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator was down, Monday, an indication that the S&P 500 is most likely to trend down in the near term. The indicator has flattened some, so the signal is not as strong as it might be. I continue to hold short positions mostly in SH and some in QID, but those will have to go if the market exceeds my pain-target of 2110 on the S&P 500.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 55.4% Monday. It was 56.4% Friday. (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 52.3%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) finished at zero and was neutral on the markets.
New-highs again outpaced New-lows. The spread (new-highs minus new-lows) was +136 Monday. (It was +90 Friday). The 10-day moving average of the change in spread rose to minus-1. In other words, over the last 10-days, on average; the spread has decreased by 1 each day. New-hi/new-low data has turned down and is now suggesting further declines ahead. Overall though, Market Internals remained neutral on the markets, because Breadth (% of stocks advancing) is greater than 50%.
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
Monday, VIX, Sentiment, Price & Volume indicators were all neutral. The long-term NTSM indicator is HOLD.
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. If the S&P 500 index closes above 2110, I plan to add to my stock allocation.
The S&P 500 peaked in Mid-May and has not been able to break higher in the past 11-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
