UNEMPLOYMENT CLAIMS (Bloomberg)
“The number of applications for U.S. unemployment
benefits last week held at the lowest level since mid-April, further evidence
of a strong labor market. Jobless claims were unchanged at 254,000 in the week
ended July 9…” Story at…http://www.bloomberg.com/news/articles/2016-07-14/jobless-claims-in-u-s-hold-at-lowest-level-since-mid-april
PRODUCER PRICE INDEX (USA Today)
“Prices charged by U.S. producers rose in June at the
fastest pace in 13 months, reflecting a big jump in the price of gasoline and
other energy products. The Labor Department says that its producer price index,
which measures cost pressures before they reach the consumer, increased 0.5% in
June.” Story at…http://www.usatoday.com/story/money/business/2016/07/14/producer-price-index-wholesale-inflation-gas-energy-food/87072842/
THE BOND STOCK DIVIDE (WSJ)
“…there is a way to reconcile these conflicting signals
[low Bond yields suggesting economic troubles vs. high stock prices suggesting
all is well]: Bond investors don’t expect economic catastrophe; they simply
assume central banks will act as if catastrophe is around the corner. It has
been an astute bet so far, but one that will prove costly if central bankers
change their minds.” Story at http://www.wsj.com/articles/behind-the-bond-stock-divide-is-a-big-and-risky-bet-on-central-banks-1468425525MARKET REPORT / ANALYSIS
- Thursday the S&P 500 was up 0.5% to 2164.
-VIX dropped about 2% to 12.82.
-The yield on the 10-year Treasury rose to 1.53%.
The percentage of stocks above their 200-dMA on the NYSE was 60% as of 13 July (Tuesday). If the rally is to continue, we’ll need to see that number increase in the coming weeks. I still expect a pullback in the near term that will cause the stat to fall. As long the % stays above the mean (53%) it would appear that the markets can go higher.
Chart from…
http://www.indexindicators.com/charts/sp500-vs-nyse-stocks-above-200d-sma-params-20130710_20160714-x-x-x/Why I expect a short-term pullback:
The S&P 500 remains massively “overbought” when using the old stand-by Advance-Decline ratio; the S&P 500 Index is very close to its upper Bollinger Band, (but not overbought yet). Both are bearish indicators short-term. It’s going to take a big up-move, perhaps in the range of 1.3% or higher, to signal an end to this up-swing in the short-term.
Indicators remained bullish today, but less so than Wednesday. I remain Bullish in the intermediate term.
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; currently it is 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 61.8% Thursday, but it remains “overbought” using the old overbought/oversold index. It was 64.7% Wednesday. A number above 50% is usually GOOD news for the markets, but this is way too high and suggests a pullback soon.
On a longer term, the 150-day moving average of advancing stocks climbed to 53.5%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) dropped from +46 (percentage calculation method) to +41.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) rose to +236 Thursday. (It was +177 Wednesday.) The 10-day moving average of the change in spread declined to minus-5. In other words, over the last 10-days, on average; the spread has decreased by 5 each day. Market Internals switched to negative 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 negative – down moves have been larger than up-moves recently. (The indicator is now overly influenced by the 1-large down day on 24 June.) Sentiment 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.
