“The U.S. economy expanded at a modest pace since mid-May amid “slight” price pressures and some softening in consumer spending, a report from the Federal Reserve’s 12 districts showed.” Story at…
http://www.bloomberg.com/news/articles/2016-07-13/fed-says-economy-growing-modestly-with-slight-price-pressures
CRUDE INVENTORY (Reuters)
“Oil prices fell nearly 3 percent on Wednesday, extending losses and hitting session lows, after the U.S. government reported a smaller-than-expected crude inventory draw for last week. Crude futures had fallen earlier after the International Energy Agency (IEA) cautioned that a global supply glut was threatening market recovery.” Story at….
http://www.reuters.com/article/us-global-oil-idUSKCN0ZT01M
JOLTS (WSJ)
“The number of job openings slid in May to the lowest level of the year, underscoring that month’s weakness in the labor market–though separate reports have shown a rebound in June. The number of job openings fell to 5.5 million in May from 5.85 million in April” Story at…
http://blogs.wsj.com/economics/2016/07/12/job-openings-declined-in-may-a-month-of-weak-job-market-performance/?mg=id-wsj
BEAR MARKET OVER? - BREAKOUT OR MELTUP? (Real Investment Advice)
“There are several things that need to happen before you going jumping head first into the pool.
1. We have seen repeated breakout attempts on Friday’s previously which have failed to hold into the next week. Therefore, IF this breakout is going to succeed, allowing us to potentially increase equity allocation risk, it must hold through next Friday.
2. The overbought condition on a weekly basis needs to be resolved somewhat to allow enough buying power to push stocks above 2135 with some voracity. A failure at that resistance level could lead to a bigger retracement back into previous trading range of 2040-2100.
3. Interest rates, as shown below, need to start “buying the rally” showing a shift from “safety” back into “risk” as seen following the April deviation. (Gold bars show declining rates correlated with falling asset prices. Green bars are rising rates correlated rising assets.)
4. Volume needs to start expanding, second chart below, to confirm “conviction“ to a continuation of the “bull market.”
https://realinvestmentadvice.com/technically-speaking-breakout-or-market-meltup/
EARNINGS (Financial Sense)
http://www.financialsense.com/sites/default/files/users/u149/images/2016/sp-500-earnings-gaap.pngMy cmt: The current estimate is for -5.6% earnings decline for Q2 per FACTSET. FACTSET also notes that this early number usually improves, so there is hope that earnings might be positive (or close to it) for Q2. That is a large part of the current rally.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was unchanged at 2152, remaining 1% above the prior high in May 2015.
-VIX dropped about 4% to 13.04.
-The yield on the 10-year Treasury dropped to 1.47%.
The “broken record report”…
ON THE BEAR SIDE: The S&P 500 remains massively “overbought” when using the old stand-by Overbought/Oversold Index (Advance-Decline ratio). The S&P 500 Index is very close to its upper Bollinger Band and the 10-dMA of TICK remains above 300. All are bearish indicators short-term.
BULLISH
Most indicators are now bullish; the NTSM long-term indicator improved; the 5-10-20 system says buy. We’ve also seen a number of 90% up-volume days recently and that’s very bullish; as a result, I am now a Bull in the intermediate term (even though a short-term pullback is expected anytime).
I expect a pullback anytime in the 3-5% range.
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; it is now giving a bullish reading. I will be selling some short positions in SH and QID in my trading portfolio soon depending on market action – I’m waiting for the pullback.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 64.7% Wednesday and remains “overbought” using the old overbought/oversold index. It was 68.5% Tuesday
On a longer term, the 150-day moving average of advancing stocks climbed to 53.3%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) dropped from +63 (percentage calculation method) to +43.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) dropped to +177 Wednesday. (It was +265 Tuesday.) The 10-day moving average of the change in spread improved to +3. In other words, over the last 10-days, on average; the spread has increased by 3 each day. Market Internals remained bullish 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 Sentiment, Price and VIX indicators were neutral. Volume (a variant of on-balance-volume) was positive.
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).
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.
