“Oil prices rose on Wednesday, with U.S. crude rebounding from two-month lows, after the U.S. government reported a ninth straight week of crude inventory declines that came within expectations in a market worried about a fuels glut.” Story at…
http://www.reuters.com/article/us-global-oil-idUSKCN10001U
My cmt: Rig counts have been slowly rising so that may put a lid on oil prices soon.
CASS FREIGHT INDEX (Cass Information Systems)
“The June freight shipments index…was 4.3 percent below last year and 7.6 percent lower than June 2014….Total freight expenditures jumped 3.9 percent in June…[BUT]… June 2016 is still 8.8 percent below June 2015.”
http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
My cmt: Shipments down 4% and expenditures down nearly 9% when compared to year ago numbers – that’s not good and doesn’t fit with the improving economy storyline espoused recently by so many pundits.
EXTREMES (Real Investment Advice)
“…there is a difference in pullbacks.
(1) A pullback to 2135, the previous all-time high, that holds that level will allow for an increase in equity allocations to the new targets.
(2) A pullback that breaks 2135 will keep equity allocation increases on “HOLD” until support has been tested.
(3) A pullback that breaks 2080 will trigger “stop losses” in portfolios and confirm the recent breakout was a short-term “head fake.” Commentary at…
https://realinvestmentadvice.com/tftb-technically-speaking-pushing-extremes/
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose 0.43% to 2173.
-VIX dropped about 2% to 11.77.
-The yield on the 10-year Treasury rose slightly to 1.58%.
Another new-high today for the S&P 500 Index, but the percentage of issues making new-highs on the NYSE was only 5.9%. Back in May of 2013 the percentage was twice as high. It just shows the markets are still narrow. 61% of stocks on the NYSE are above their 200-dMA and that is higher than the danger zone median value of 53%.
Volume has been 20% below the monthly average for the last 4-days (and again today) and over the last 10-days ago it has been 10-15% below the norm every day but one – volume is hinting at a top. I have been saying that for far too long as I have had multiple indicators stretched to their limits. They aren’t all sell, so maybe we’ll have to wait for all of them to signal a top, even for only a short term top.
Wednesday’s value of RSI was 85 and that is an “overbought” indication. The S&P 500 also remains “overbought” when using the old stand-by Advance-Decline Ratio.
I’m still guessing we see a pullback in the 4-5% range, but it is getting frustrating waiting for a move. I remain Bullish in the intermediate term; bearish short-term. A retracement down is due now.
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; Wednesday it remains sharply down and giving a bearish reading. I added to short positions Monday using 2x short ETF’s. I’ll cover recent purchases tomorrow unless the S&P 500 falls; I’ll begin to cover shorts I have held longer. As I said before, I don’t expect to short for long; the trend is up. I have violated too many trading rules by staying short too long. Fortunately, my trading portfolio is relatively small. With 25% invested in stocks in the long-term portfolio I am now net long so short positions act as a hedge.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) improved to 61.2% Wednesday, but it remains “overbought” using the old overbought/oversold index. It was 60.9% Tuesday. A number above 50% is usually GOOD news for the markets, but this is too high and suggests a pullback.
On a longer term, the 150-day moving average of advancing stocks climbed to 54.2%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) climbed from +18 (percentage calculation method) to +26.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) rose to +176 Wednesday. (It was +157 Tuesday.) The 10-day moving average of the change in spread improved to minus-3. In other words, over the last 10-days, on average; the spread has decreased by 3 each day. Market Internals remain 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).
LONG TERM INDICATOR
Wednesday, Sentiment, Price and indicators were neutral; VIX and Volume indicators were positive. The long-term indicator is BUY, but recognize that a pullback is expected in the near future.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONOn 12 July I increased my invested position in my retirement account to 25% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP). I’ll add to that tomorrow and bring my invested total up to 40% if Thursday is a big down day; or if Thursday is a moderate up-day. If it were a huge up-day (>1%), I’d take that as a top indicator and wait for a better entry point.
The market isn’t following my indicators; it’s the other way ‘round, so I am tired of being wrong - time to average into stocks a bit more.
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions. I’m following my system now, especially since the Index has climbed above my initial sell-point of 2100 on the S&P 500 back in November 2015.
