The number of Americans filing applications for unemployment benefits was little changed last week, holding near four-decade lows that highlight strength in the job market. Jobless claims fell by 1,000 to 266,000 in the week ended Aug. 6…” Story at…
http://www.bloomberg.com/news/articles/2016-08-11/jobless-claims-in-u-s-little-changed-for-second-straight-week
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.5% to 2186.
-VIX dipped about 3% to 11.68.
-The yield on the 10-year Treasury rose to 1.57%.
Thursday was a statistically significant day and that means that price-volume exceeded my statistical parameters and, in about 60% of the time, that leads to a down-day the next day (Friday). This is bearish on several levels.
VXX TRADE:
VXX split 1 for 4 Tuesday and that accounts for the big jump in price Tuesday. My trade is currently a loser as of Thursday. Today, the calm-before-the-storm indicator remains down and that suggests that VXX was still a buy as of Thursday’s close.
BOLLINGER BAND SQUEEZE PLAY:
The Bollinger Band Squeeze-Play has ended, but it doesn’t mean much. The bands are still very close together, but they drifted slightly further apart and that spread failed to meet the 6-month low test. Make no mistake – they are still narrow and that is signaling a breakout that is likely to be down.
The Index is finished at its upper band that is a bearish indicator, too.
Overall, there’s not much change from yesterday’s blog. Indicators are mixed. Thursday’s price-action, Bollinger Bands, and statistically calm demeanor of the Index suggests a break down coming soon, but it may not be much more than a 5% drop.
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
Thursday, 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 rather than indicating that this is a great time to buy. It looks like a short-term top to me.
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.
