EXISTING HOME SALES DECLINE (Reuters)
"U.S. home resales fell more than expected in July after four straight months of strong gains as a lack of inventory limited choice for buyers, but further gains in prices suggested the housing market remained on solid ground. The National Association of Realtors said on Wednesday existing home sales declined 3.2 percent…” Story at…
http://www.reuters.com/article/us-usa-economy-housing-idUSKCN10Z1QA
My cmt: New Home sales are probably more important to the economy than existing sales, because of construction employment. Mike Shedlock pointed out that the news yesterday (“New-home sales surged in July to the highest level in almost nine years…”) was misleading. When one looks at the overall record, new home sales are improving, but could be a lot better.
Chart from…https://mishgea.files.wordpress.com/2016/08/new-home-sales-2016-08a.png
CRUDE INVENTORIES (24/7 Wall St.)
“U.S. commercial crude inventories increased by 2.5 million barrels last week, maintaining a total U.S. commercial crude inventory of 523.6 million barrels. The commercial crude inventory remains at historically high levels for this time of year…”
http://247wallst.com/energy-economy/2016/08/24/rising-crude-oil-inventory-stifles-prices-after-volatile-week/
My cmt: Crude oil was falling today due to the inventory build.
KEEP ON TRUCKIN’ (ATA)
“American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 2.1% in July, following a revised 1.6% decline during June….Compared with July 2015, the SA index rose just 0.3%, the smallest year-over-year gain in 2016…Year-to-date, compared with the same period in 2015, tonnage was up 3.2%.” Press release from ATA at…
http://www.trucking.org/article/ATA-Truck-Tonnage-Index-Fell-2.1%25-in-July
YELLEN SPEECH ON FRIDAY
I predict Yellen will say this at Jackson Hole: “Blah Blah Blah Blah Blah Blah…data dependent…Blah Blah Blah Blah Blah…” Please! I have had enough.
MARKET REPORT / ANALYSIS
- Wednesday the S&P 500 was down about 0.5% to 2175.
-VIX rose about 9% to 13.45.
-The yield on the 10-year Treasury rose slightly to 1.56%.
Broken Record Report: The 10-dMA of Tick (sum of closing up minus down trades) was again over 300 for the fifth 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.
On a bullish side (maybe?), Wednesday, the size of the down-move was statistically significant and that means that the price-volume move exceeded my statistical parameters and, in about 60% of the time, that leads to an up-day the next day (Thursday). I have no idea whether this is still a valid analysis since the market has been so calm that it now takes a move about half as big to create a statistically significant day.
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 Wednesday’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 3%, because it doesn’t always closely track VIX. In addition VXX will only move about half of VIX.
I plan to exit this trade when I have a statistical “BUY” indication in price-volume. Currently, it would take about a one-day 1.5% drop in the S&P 500 to generate a Buy signal. If it happens, I would expect to generate a decent profit on the VXX trade. Whether that would also be a good point to exit short positions remains to be seen.
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; Wednesday it is trending down more steeply; a bearish indication.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 51.8% Wednesday. It was 53.2% Tuesday. 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 55.1%. A value above 50% generally indicates an up-trend. The McClellan Oscillator declined from -5 to -29.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) fell to +102 Wednesday. (It was +218 Tuesday.) The 10-day moving average of the change in spread was minus-9. In other words, over the last 10-days, on average, the spread has decreased by 9 each day. Market Internals switched to negative 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
Wednesday 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.
