“Retail sales rose more than forecast in May, showing consumer spending will help boost economic growth in the second quarter. The 0.5 percent increase in purchases followed a 1.3 percent jump the previous month that was the biggest gain in a year…” Story at…
http://www.bloomberg.com/news/articles/2016-06-14/retail-sales-rise-more-than-forecast-as-u-s-consumers-spend
BUSINESS IINVENTORIES (Reuters)
“U.S. business inventories barely rose in April as sales
recorded their biggest increase in more than two years, pointing to a slow pace
of inventory accumulation that could weigh on economic growth in the second
quarter. The Commerce Department said on Tuesday inventories gained 0.1 percent
after a downwardly revised 0.3 percent rise in March.” Story at…http://www.reuters.com/article/us-economy-inventories-idUSKCN0Z01Q4
SMALL BUSINESS OPTIMISM (NFIB)
“The Index of Small Business Optimism rose two tenths of a point in May to 93.8, a negligible increase showing no real enthusiasm for making capital outlays, increasing inventories, or expanding, according to the National Federation of Independent Business (NFIB).
“The bottom line is that without an empowered small business sector, the economy will grow at a mediocre pace,” said NFIB Chief Economist Bill Dunkelberg. “Politicians in Washington credit any insignificant growth in the economy to their policies, but realistically, it’s the increase in the population. At this point, we should expect the same slow growth for the rest of the year.” - NFIB. Press release available at…
http://www.nfib.com/surveys/small-business-economic-trends/
NEGATIVE 10-YEAR BUND RATES IN GERMANY (CNBC)
“The German 10-year bund yield's first-ever dip below zero on Tuesday is negative for markets because it reflects lack of confidence in European monetary policymakers, Pimco Global Strategic Advisor Richard Clarida said.” Story at…
http://www.cnbc.com/2016/06/14/germanys-10-year-bund-move-shows-lack-of-confidence-in-ecb-pimcos-clarida.html
My cmt: One wonders how much of the falling bond rates are due to possible Brexit.
STATE AND FEDERAL TAX RECEIPTS BELOW RECESSION LEVELS
(Hussman Funds)
Chart discussion and additional commentary at…
http://www.hussmanfunds.com/wmc/wmc160613.htm
MARKET REPORT / ANALYSIS
-Tuesday, the S&P 500 was down about 0.2% 2075.
-VIX was down about 2% to 20.50 at the close.
-The yield on the 10-year Treasury slipped to 1.61%.
There was a nice rally late in the day today suggesting that the Pros think the selling is overdone. Another thesis is the markets have been rallying after Fed meetings so traders want to be long tomorrow. Not all of the late-day action was positive; Closing Tick (measuring the last trades of the day) was minus-295 Tuesday. When tick is negative on a down day it often means the next day (Wednesday) will be down. It seems to be consensus that there will be a bounce up after the Fed meeting. Perhaps, but when everyone says the market is going to do one thing, it usually does the opposite.
My sum of 16-indicators was zero a week ago. Now it is minus-5 reflecting the weakening conditions in the stock market. At this point, it looks like 2025 would be a logical place for a bounce up, but I’ll follow indicators when the Index gets to that level.
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile, but it fell again Tuesday and it remains sharply down; that’s bearish. I continue to hold short positions mostly in SH and some in QID in the trading portfolio only.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 50.1% Tuesday. It was 52.4% Monday. A number above 50% is usually GOOD news for the markets, but now it is falling rapidly.
On a longer term, the 150-day moving average of advancing stocks remained 51.6%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) dropped again, and remained negative.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +12 Tuesday. (It was +74 Monday). The 10-day moving average of the change in spread slipped to minus-9. In other words, over the last 10-days, on average; the spread has decreased by 9 each day. Market Internals remained neutral on the market.
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.
LONG TERM INDICATOR
Tuesday, the Volume & Sentiment indicators were neutral; the Price indicator (measuring the size of up vs down moves) was positive; the VIX indicator remained negative. The long-term NTSM indicator remained 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.
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 12-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
