“America's economic growth was even weaker than previously believed in the second quarter of the year, as the country's gross domestic product ticked up an underwhelming 1.1 percent in April, May and June. U.S. GDP was revised down slightly from a previously reported 1.2 percent annualized rate…”
http://www.usnews.com/news/articles/2016-08-26/gdp-sinks-lower-despite-spending-uptick
MICHIGAN SENTIMENT
“The final results of the University of Michigan Consumer Sentiment Index for August was 89.8, below the 90.4 preliminary estimate and 90.6 average analyst estimate, according to a Thomson Reuters survey. The current conditions portion of the survey fell to 107 from 109 in July.” Story at…
http://www.economiccalendar.com/2016/08/26/final-reutersmichigan-consumer-sentiment-index-for-august-edges-lower-to-89-8/
My cmt: Not much change here.
YELLEN SPEECH (Business Insider)
“The case for another interest-rate hike has strengthened in recent months, according to Federal Reserve Chair Janet Yellen….” Story at…
http://www.businessinsider.com/janet-yellens-speech-at-jackson-hole-august-26-2016-8
Here’s the exact quote: “Blah Blah Blah Blah Blah Blah…data dependent…Blah Blah Blah Blah Blah…” – Janet Yellen. This confirms with certainty that the Federal Reserve might someday raise rates.
VIX UPDATE – 3 THINGS (Real Investment Advice)
“The complacency in the equity markets, as measured by implied volatility (VIX), is at levels rarely seen…net speculative positions in the VIX futures contracts are at record levels of short exposure. In other words, speculators betting on a VIX decline outnumber those betting on an increase in volatility by the largest margin in at least twelve years. A normalization of this positioning could quickly occur and in a disorderly fashion due to the extreme positioning of speculative traders. If this were to occur it would likely add to downside pressure on equity prices.” Commentary at…
https://realinvestmentadvice.com/3-things-4-trillion-qe-vix-update-wage-warning/
My cmt: Got that. My VXX trade is a contrarian play betting against the majority who are betting on a VIX decline.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.2% to 2169.
-VIX rose about 0.2% to 13.65.
-The yield on the 10-year Treasury rose to 1.64%.
Short-term indicators are still pointing down. My bearish short-term stance remains and I suspect next week will be down again. So far I am 2 for 3 on my weekly guesses.
VXX TRADE:
Friday, the calm-before-the-storm indicator (low standard of deviation in recent market moves) still remains down and that suggests that VXX remained a buy as of Friday’s close.
SHORT TRADE
I am still holding short positions, but I did exit some of the short positions and transitioned into VXX. (This books a loss for the trade for tax purposes and maintains a bearish stance.) I caution again to take it easy on this high risk stuff.
MONEY TREND INDICATOR
My short-term Money Trend indicator can be volatile; Friday it is trending down, a bearish indication.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 50.3% Friday. It was 51.1% Thursday. A number above 50% is usually GOOD news for the markets.
On a longer term, the 150-day moving average of advancing stocks rose to 55.1%. A value above 50% generally indicates an up-trend. The McClellan Oscillator declined from -24 to -35.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) improved to +185 Friday. (It was +106 Thursday.) The 10-day moving average of the change in spread was +3. In other words, over the last 10-days, on average, the spread has increased by 3 each day. Market Internals improved to 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
Friday the Price indicator was positive; Sentiment, VIX and & Volume indicators were neutral. The long-term indicator is HOLD. The important Buy-signal was in June and before that at the bottom in February (Too bad I was too stupid to follow my own system!). Now a BUY-signal just shows that the markets have been pretty good recently. I think we are near a short-term Top so this is not a great time to buy.
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.
