“The number of Americans who filed for unemployment benefits last week rose from a three-month low, consistent with the Federal Reserve’s view of a stronger job market. Jobless claims increased by 14,000 to 266,000 in the week ended July 23…” Story at…
http://www.bloomberg.com/news/articles/2016-07-28/jobless-claims-in-u-s-climbed-last-week-from-a-three-month-low
ODD MAN OUT (Global Economic Perspective)
“Spot the Odd One: Gold Up, Silver Up, Oil Down, Dollar Down, Treasuries Up, Economy Strengthening…” Commentary at…
https://mishtalk.com/2016/07/27/spot-the-odd-one-gold-up-silver-up-oil-down-dollar-down-treasuries-up-fed-says-economy-strengthening/
My cmt: It’s obvious right? If the economy is strengthening, the others shouldn’t be rising too.
RED FLAGS (Real Investment Advice)
“…the market is currently 3-standard deviations above its 50-day moving average. This is ‘rarefied air’ in terms of price extensions and a pullback is now necessary to provide a better entry point for increasing equity allocations.” Commentary at…
https://realinvestmentadvice.com/technically-speaking-red-flag-update/
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.2% to 2170.
-VIX dipped about 1% to 12.72.
-The yield on the 10-year Treasury remained 1.51%.
Now that the S&P 500 has passed its old high of 2131, made last May of 2013, one would think there is an all clear signal for the markets - unfortunately, not yet. Traders generally like to see the Index close 2-times above a trend line to show a change in trend …or… close more than 3% above the trend. When it comes to breaking to new highs in a convincing manner, I think it needs to do both. The Index is now 2% above the prior high and drifting around the 2175 all-time high for a little more than a week. I mention this to point out that this rally still could be just a bear market bounce. Market action recently isn’t as bullish as it should be to convince me that new-highs are coming.
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 -11 to -16 Thursday, so deterioration continues 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. A huge up-day would be a signal for a short-term top. 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; Thursday it remains pointing down and continues to be sharply down; a bearish indication. (Shorts are tattered, but still on.)
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 53.2% Thursday. It was 53.7% Wednesday. 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 53.7%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) dipped from -9 (percentage calculation method) to -12.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) rose to +202 Thursday. (It was +158 Wednesday.) The 10-day moving average of the change in spread slipped to minus-3. In other words, over the last 10-days, on average; the spread has decreased by 3 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
Thursday, 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.
