“The number of Americans filing new applications for jobless benefits rose slightly last week, but remained at a level consistent with steady hiring. Initial claims for unemployment benefits, a proxy for layoffs across the U.S. increased by 3,000 to a seasonally adjusted 269,000 in the week ended July 30…” Story at…
http://www.wsj.com/articles/u-s-jobless-claims-up-slightly-last-week-1470313895
FACTORY ORDERS (CNBC/Reuters)
“New orders for U.S. factory goods fell for a second straight month in June on weak demand for transportation equipment and capital goods, but signs of stabilization in business spending offered some hope for struggling industries. The Commerce Department said on Thursday that new orders for manufactured goods declined 1.5 percent…” Story at…
http://www.cnbc.com/2016/08/04/factory-orders-report-for-june-2016-from-the-commerce-department.html
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was unchanged at 2164.
-VIX dipped about 4% to 12.36.
-The yield on the 10-year Treasury dipped to 1.50%.
There is a Squeeze Play Thursday on the S&P 500 Bollinger Bands that indicates a breakout is coming – the most likely breakout direction is down. Bollinger Bands are simply a 2-standard deviation measure (up and down) of Index statistics. As these bands contract and get close together when plotted, it means that the movements in the Index have a low standard deviation. The spread between the top and bottom bands are now at a 6-month low suggesting a breakout. This is similar to my “calm-before-the-storm” indicator.
My simple recession indicator compares the S&P 500 index to the Industrial Select Sector SPDR ETF (XLI) because it is a cyclical ETF and should be more recession sensitive than the S&P 500. Currently the XLI is under-performing the S&P 500 in almost all time frames; while it is not enough to indicate a recession, it does show investor concern. This is not unusual when the Index is under stress as it has been recently.
Market Internals on the NYSE continue to fall faster than the S&P 500 and this usually indicates a pullback.
My 10-day sum of 16 indicators declined from -28 to -32 Thursday, so indicators are getting worse on a 10-day basis. Internals don’t improved, but the trend in new-highs / new-low data continues down.
I’m still guessing we see a pullback in the 5% range. Perhaps it is underway.
VXX TRADE
My numbers still don’t support taking a position, but they again came somewhat close to a VXX buy signal Thursday. (For background on a possible VXX Trade see last Friday’s blog.)
SHORT TRADE
I am still holding short positions.
MONEY TREND INDICATOR
My short-term Money Trend indicator can be volatile; Thursday it remains pointing sharply down; a bearish indication.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 51.4% Thursday. It was a whisker below 50% Wednesday. A number above 50% is usually GOOD news for the markets.
On a longer term, the 150-day moving average of advancing stocks climbed to 53.3%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) improved from -30 (percentage calculation method) to -24.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) rose to +163 Thursday. (It was +82 Wednesday.) The 10-day moving average of the change in spread rose to 0. In other words, over the last 10-days, on average, the spread has remained unchanged 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
Thursday, the Price indicator was positive; Sentiment, Volume and VIX indicators were neutral. The long-term indicator is HOLD.
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.
