“U.S. wholesale inventories barely rose in May as automobile stocks recorded their biggest drop in more than 2-1/2 years, suggesting inventory investment likely remained a drag on economic growth in the second quarter. The Commerce Department said on Tuesday that wholesale inventories edged up 0.1 percent…”
http://www.reuters.com/article/us-usa-economy-inventories-idUSKCN0ZS2EF
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 0.7% to 2152, 1% above the prior high in May 2015.
-VIX rose about 1% to 13.55.
-The yield on the 10-year Treasury jumped up to 1.51%.
Repeating most of yesterday’s post:
ON THE BEAR SIDE: The S&P 500 remains “overbought” when using the old stand-by Overbought/Oversold Index (Advance-Decline ratio). It is not just overbought, it is extremely overbought, exceeding numbers going all the way back to December of 2009. This again is suggesting a top. The Index is very close to the upper Bollinger Band also suggesting a retreat in price is likely soon. Bollinger Bands are simply a 2-standard deviation measure of Index movements. While the Index is creeping up to the upper Bollinger Band, the Bollinger Band is moving up too. They will converge soon and that will be a clear signal for a pullback. The 10-dMA of Closing Tick (sum of the last trades of the day) was +324 another topping indicator. Tom McClellan has noted that this can be read as an overbought situation too.
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.
With a preponderance of high volume days going to the up-side the bullish trend is set to continue, especially since today’s close was above the old prior all-time high. That is now an overall trend, but we are still due for a short-term pullback in the near future. It is always hard to know whether to wait for a pullback or jump in. I chose to jump in today because the markets could advance further before that pullback occurs. I’ll add to my stock position on future pullbacks unless we see indicators suggesting further downside for the S&P 500.
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; it is now giving a very strong a bullish reading. I will be selling some short positions in SH and QID in my trading portfolio soon depending on market action. I should have sold them long ago.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) jumped to 68.5% Tuesday and remains “overbought” using the old overbought/oversold index. It was 63.4% Monday. 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 remained 53.1%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) climbed from +56 (percentage calculation method) to +63.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) climbed to +265 Tuesday. (It was +339 Monday.) The 10-day moving average of the change in spread improved to +28. In other words, over the last 10-days, on average; the spread has increased by 28 each day. Market Internals are bullish on the market. They were bullish yesterday too. I’m not sure why I had this wrong yesterday.
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
Tuesday, 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.
