EMPIRE MANUFACTURING – CONTRACTING AGAIN (Business Insider)
“Manufacturing in New York declined for a second straight month, and the index of activity is back in negative territory. The Empire Manufacturing index from the New York Federal Reserve fell to -4.2 in August.” Story at…
http://www.businessinsider.com/empire-state-manufacturing-survey-august-2016-2016-8
CASS FREIGHT INDEX (CASS Information Systems)
“Freight shipments and expenditures edged up in June after three months of lackluster performance…
…The June freight shipments index…was 4.3 percent below last year…
…Total freight expenditures jumped 3.9 percent in June—the second largest increase this year. Most of this increase can be attributed to the growth in shipments. June 2016 is still 8.8 percent below June 2015.” CASS Freight Index Report available at…
http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
My cmt: Shipments 4% below last year; Expenditures 9% below last year. Shipping is not healthy, but this trend has been in place for some time.
OIL DEMAND IS A CONCERN (CNBC)
“Oil prices may have risen since the start of the month, but analysts believe the lackluster outlook for global demand – amid a shaky global growth environment and stubborn oversupply - should be more of a concern for investors.” Story at…
http://www.cnbc.com/2016/08/15/oil-demand-outlook-should-worry-investors-analysts-warn.html
My cmt: Oil seems to be leading the stock market again so this may affect the markets if the analysis is true.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 0.3% to 2190.
-VIX rose about 2% to 11.81. (The options boys are getting worried.)
-The yield on the 10-year Treasury rose to 1.55%.
Monday’s tight Bollinger Bands and the statistically calm demeanor of the Index still suggest a break-down coming. Options players seem to agree since VIX was up on the day. Money Trend is nearly flat (a neutral indication).
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 Monday’s close.
The Bollinger Bands are still very close together and the Index finished 1 pt. below the upper Bollinger Band. That’s reasonably bearish.
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; Monday it is still nearly flat; a neutral indication.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 55% Monday (nearly overbought). It was 52.6% Friday. A number above 50% is usually GOOD news for the markets.
On a longer term, the 150-day moving average of advancing stocks improved to 54.7%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) improved from -11 (percentage calculation method) to zero.
New-highs outpaced New-lows. The spread (new-highs minus
new-lows) rose to +209 Monday. (It was +154 Friday.) The 10-day moving average
of the change in spread rose to -1. In other words, over the last 10-days, on
average, the spread has decreased by 1 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
Monday, 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.
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.
