“New-home sales surged in July to the highest level in almost nine years as strong demand amid low interest rates and low existing inventory helped boost the housing market. Sales of new single-family houses jumped 12.4% from June to a seasonally adjusted annual rate of 654,000, the highest level since October 2007.” Story at…
http://www.usatoday.com/story/money/business/2016/08/23/new-home-sales-real-estate-housing-market/89197492/
TRUMP’S CHANCES TO WIN (Mish Talk)
“Winning most of the states currently marked toss-up will not be good enough for Trump. In fact, winning all of them will not be enough. Trump’s curious focus on Minnesota should now be easy to understand in light of the math above [in the full piece by Mike Shedlock]. Trump knows what he has to do. It’s an uphill battle, but not impossible. I expect a much closer election than the polling odds and mainstream media has you believe.” Story at…
https://mishtalk.com/2016/08/21/analyzing-trumps-election-chances-what-does-trump-need-to-do-to-win/
STOCK MARKET EERILY QUIET (WSJ)
“The past 30 days have been the least volatile of any 30-day period in more than two decades. Only five days during the most recent stretch saw the S&P 500 move by more than 0.5% in either direction, the lowest since the fall of 1995…The lesson of the past seven years is that policy makers will step in every time disaster strikes. But investors tempted to rely on the central banks should note that disasters did still strike, and markets had big falls before help arrived.” Story at…
http://www.wsj.com/articles/its-getting-scarily-quiet-in-the-stock-market-1471889703
I wrote about complacency in yesterday’s blog; Tuesday it was front page news in the Wall Street Journal. The article went on to suggest that now is the time to “buy insurance” i.e. put options that make money if the market falls. That’s one thing that should help make the VXX trade work. Of course, that trade is far from certain.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 0.2% to 2187.
-VIX rose about 1% to 12.38. (Clearly the Options Boys are nervous since VIX is going up while the S&P 500 is going up.)
-The yield on the 10-year Treasury rose slightly to 1.55%.
The 10-dMA of Tick (sum of closing up minus down trades) was again over 300 for the fourth day in a row and that is a bearish sign according to Tom McClellan. Short-term indicators are pointing down, but not drastically so. My bearish short-term stance remains and I suspect this week will be down.
VXX TRADE:
Today, 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 Tuesday’s close. It’s a better buy today than when I first bought it about 2-weeks ago and VIX is nearly the same value as it was then. Unfortunately, VXX is down about 5%, because it doesn’t always closely track VIX. In addition VXX will only move about half of VIX.
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; Tuesday it is trending down; a slightly bearish indication.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) bounced up to 53.2% Tuesday. It was 51.9% Monday. 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 55.4%. A value above 50% generally indicates an up-trend. The McClellan Oscillator improved from -20 to -5.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) jumped to +218 Tuesday. (It was +82 Monday.) The 10-day moving average of the change in spread was minus-5. In other words, over the last 10-days, on average, the spread has decreased by 5 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 VIX and Price indicators were positive; Sentiment & Volume indicators were neutral. The long-term indicator is BUY; but keep in mind 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.
