The CPI was unchanged in July as energy prices fell and core inflation softened. The weaker print in core inflation, however, stemmed from the more volatile components and is not the start of a new trend.” Story at…
http://www.fxstreet.com/analysis/don-t-expect-the-softness-in-the-july-cpi-to-last-201608161411
HOUSING (USA Today)
“Housing starts posted a robust gain in July and building permits dipped slightly but stayed at a healthy level as home builders strive to catch up with strong demand. Privately-owned housing starts rose 2.1% from June to a seasonally adjusted annual rate of 1.21 million, its highest level since February 2016 and the second highest level since October 2007, when housing starts hit 1.26 million.” Story at…
http://www.usatoday.com/story/money/business/2016/08/16/housing-starts-reale-state-building-permits/88773358/
My cmt: Housing starts near 2007 levels? I would not have guessed that those extremes would be met. If you haven’t seen it, watch the movie “The Big Short.” Housing is important to the economy; this looks like good news since one must assume the excesses of 2007 aren’t present now – let’s hope.
INDUSTRIAL PRODUCTION (Financial Times)
“US industrial production climbed the most in July since November 2014, adding to signs of improvement in the nation’s manufacturing sector. US industrial production – a measure of everything made by factories, mines and utilities — rose 0.7 per cent in July from the previous month, when it grew 0.4 per cent, according to the Federal Reserve.” Story at…
http://www.ft.com/fastft/2016/08/16/us-industrial-production-rises-most-since-2014/
My cmt: This was double the expectation.
MARKET REPORT / ANALYSIS
- Tuesday the S&P 500 was down about 0.6% to 2178.
-VIX rose about 7% to 12.64. (The options boys are getting worried.)
-The yield on the 10-year Treasury rose to 1.58%.
Bearish indicators: Bollinger Bands are tight; the Index is statistically calm; the advance/decline ratio is overbought. (The S&P 500 is 3 pts higher than it was when the index last was overbought 3-weeks ago.); VIX has been creeping up; late day action is trending down; new-high/new-low data is showing signs of a bearish shift.
Bullish Indicators:
Money Trend is trending slowly upward (a bullish to neutral indication); new-highs are advancing; the size of u moves has outpaced down moves recently; the 10-day sum of 16-indicators improved from 18 to 31.
I was predicting that last week would be down; it was up 3pts., about 0.2%. Once again I’m predicting a down week. We’ll see.
VXX TRADE:
Today, the calm-before-the-storm indicator remains down and that suggests that VXX was still a buy as of Tuesday’s close.
SHORT TRADE
I am still holding short positions, but I will begin to pare the positions and transition into additional VXX positions.
MONEY TREND INDICATOR
My short-term Money Trend indicator can be volatile; Tuesday it is up slightly, nearly flat; a slightly bullish to neutral indication.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 55.8% Tuesday (overbought). It was 55% Monday. A number above 50% is usually GOOD news for the markets.
On a longer term, the 150-day moving average of advancing stocks dipped to 54.5%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) dropped from zero (percentage calculation method) to -25.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) dropped to +103 Tuesday. (It was +209 Monday.) The 10-day moving average of the change in spread rose to +3. In other words, over the last 10-days, on average, the spread has increased by 3 each day. Market Internals remained 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
Tuesday, the Price & VIX indicators were positive; Sentiment & Volume indicators were neutral. The long-term indicator is BUY. The important Buy signal was on 22 February 2016 so this one really just shows that the markets have been doing well recently. I actually don’t think this is a great time to buy since it looks like a short-term top is overdue.
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.
