“Orders for durable or long-lasting goods made in the U.S. sank 4% in June, marking the biggest drop in almost two years and reflecting ongoing struggles by American manufacturers to drum up sales and help boost the U.S. economy.” Story at…
http://www.marketwatch.com/story/us-durable-goods-orders-sink-4-in-june-biggest-drop-in-almost-two-years-2016-07-27
My cmt: In spite of some recent improved economic news, it seems that manufacturing remains in the toilet.
CRUDE INVENTORIES (24/7 WallSt)
“The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories increased by 1.7 million barrels last week…The commercial crude inventory remains at historically high levels for this time of year, according to the EIA.” Story at…
http://247wallst.com/energy-economy/2016/07/27/crude-oil-price-plunges-on-surprise-inventory-growth/
FOMC RATE DECISION (Bloomberg)
“The Federal Reserve left interest rates unchanged while saying risks to the U.S. economy have subsided and the labor market is getting tighter, suggesting conditions are getting more favorable for an increase in borrowing costs.” Story at…
http://www.bloomberg.com/news/articles/2016-07-27/fed-says-risks-have-diminished-as-it-leaves-main-rate-unchanged
MARKET REPORT / ANALYSIS
- Wednesday the S&P 500 dipped about 0.1% to 2167.
-VIX dipped about 2% to 12.85. (The Options Boys seem to have gotten over worries.)
-The yield on the 10-year Treasury dropped to 1.51%. (The Bond Ghouls are worried.)
Volume picked up today and was about 15% above the monthly average. It hasn’t been above average since the end of June. It was average yesterday and that too was nearly a 15% jump above the prior week’s numbers. I am always cautious to declare it was distribution (smart money selling to weak hands) because I have seen analysis that suggested high volume with little change in price validates the price. Both arguments seem reasonable to me. Let’s just say that higher volume on down days suggests to me that some pullback is underway, given the other clues previously noted and repeated below. We’ll see; perhaps Facebook earnings will save the day. Futures are up again as I am writing.
Wednesday’s value of RSI was 80, indicating “overbought” for the S&P 500 as it has for 6 of the last 8-days. The Index is no longer “overbought” when using the old stand-by Advance-Decline Ratio, but it continues to decline giving a warning for the future. I watch late-day action since that’s when the Pros trade – the so called “smart money.” That indicator reached “overbought” numbers yesterday. It is a rare signal that has been right most of the time – except for last March.
Market Internals on the NYSE continue to fall faster that the S&P 500 and this usually indicates a pullback is coming.
My 10-day sum of 16 indicators dropped from -1 to -11, so deterioration is showing up in more indicators.
I’m still guessing we see a pullback in the 4-5% range and clues are beginning to give more confidence in the forecast. 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 pointing down and is now more sharply down; a bearish indication.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 53.7% Wednesday. It was 53.8% Tuesday. A number above 50% is usually GOOD news for the markets, but this number peaked about 2-weeks ago showing a deterioration in the markets.
On a longer term, the 150-day moving average of advancing stocks dipped to 53.9%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) dipped from +1 (percentage calculation method) to -9.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) dropped to +158 Wednesday. (It was +212 Tuesday.) The 10-day moving average of the change in spread rose to minus-2. In other words, over the last 10-days, on average; the spread has decreased by 2 each day. If there is going to be a pullback, new-high, new-low data needs to go negative on the spread. The NYSE is not there yet. 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, the Price indicator was positive; Sentiment, Volume and VIX indicators were neutral. The long-term indicator is HOLD.
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 added to that position Thursday 21 July bringing my invested total up to 40% in stocks. I expect to add more stocks should we get the anticipated pullback.
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.
