“The number of applications for U.S. unemployment benefits unexpectedly fell last week, reaching a three-month low, indicating the labor market remains steady. Initial jobless claims dropped by 1,000 to 253,000 in the week ended July 16…” Story at…
http://www.bloomberg.com/news/articles/2016-07-21/jobless-claims-in-u-s-unexpectedly-decline-to-three-month-low
PHILADELPHIA FED (Marketwatch)
“Activity of U.S. manufacturers in the Philadelphia region contracted in July, suggesting the hard-hit sector continues to struggle. The Philadelphia Federal Reserve’s index of business conditions declined to negative 2.9 this month from positive 4.7 in June.” Story at…
http://www.marketwatch.com/story/philly-fed-manufacturing-index-turns-negative-in-july-2016-07-21
LEADING ECONOMIC INDICATORS (CNBC)
“A measure of future economic conditions rose last month, according to a new report. The Leading Economic Index (LEI) increased 0.3 percent to 123.7 in June, The Conference Board said on Thursday.” Story at…
http://www.cnbc.com/2016/07/21/leading-indicators-for-june-2016-reported-by-the-conference-board.html
HOME SALES (USA Today)
“Bolstered by first-time home buyers, existing-home sales rose for the fourth straight month in June, reaching a nine-year high.Sales of existing single-family h omes, townhomes, condominiums and co-ops increased 1.1%...” Story at…
http://www.usatoday.com/story/money/business/2016/07/21/homesales-realestate-mortgage-realtors/87361104/
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 0.4% to 2165.
-VIX rose about 8% to 12.74. (The Options Boys seem nervous.)
-The yield on the 10-year Treasury dropped to 1.56%.
Volume was higher today, but still about 10% below the monthly average so there was no increase in volume associated with today’s mild sell-off.
Thursday’s value of RSI was 77, just short of the “overbought” indication of 80. 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. I remain Bullish in the intermediate term; bearish short-term. A retracement down is due.
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; Thursday it remains pointing down, but not as steeply down as previously; it is bearish, but not a strong call. Same note as yesterday: I added to short positions Monday using 2x short ETF’s. I’ll cover recent purchases tomorrow (Friday) 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.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 60% Thursday, but it remains “overbought” using the old overbought/oversold index. It was 61.2% Wednesday. 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 dipped to 54%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) fell from +26 (percentage calculation method) to +8.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) dipped to +166 Thursday. (It was +176 Wednesday.) The 10-day moving average of the change in spread improved to +1. In other words, over the last 10-days, on average; the spread has increased by 1 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
Thursday, Sentiment, Price and VIX indicators were neutral; Volume was positive. 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.
