“U.S. retail sales stalled in July after three straight monthly gains, according to government data released Friday. U.S. retail sales were little-changed in July, down from a gain of 0.8% in June…” Story at…
http://www.marketwatch.com/story/retail-sales-stall-in-july-2016-08-12
MICHIGAN SENTIMENT (Bloomberg)
“Consumer confidence in the U.S. rose less than forecast in August, reflecting a pullback in views on personal finances among younger Americans. The University of Michigan’s preliminary index of sentiment climbed to 90.4 from a three-month low of 90 in July…” Story at…
http://www.bloomberg.com/news/articles/2016-08-12/consumer-sentiment-in-u-s-increases-by-less-than-forecast
PPI (CNBC/Reuters)
“U.S. producer prices unexpectedly fell in July on declining costs for services and energy products, pointing to a tame inflation environment that could make it difficult for the Federal Reserve to raise interest rates. The Labor Department said on Friday its producer price index for final demand dropped 0.4 percent last month….” Story at…
http://www.cnbc.com/2016/08/12/us-producer-price-index-july-2016.html
INVESTOR BLINDNESS (Real Investment Advice)
“The problem for individual investors is the “trap” that is currently being laid between the appearance of strong market dynamics against the backdrop of weak economic and market fundamentals. Ignoring the last two to chase the former has historically not worked out well. – Lance Roberts. Commentary at…
https://realinvestmentadvice.com/weekend-reading-willful-blindness/
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.1% to 2184.
-VIX dipped about 1% to 11.55.
-The yield on the 10-year Treasury dipped to 1.52%.
Not much change this week as indicators were flat and so was the S&P 500. Thursday’s price-action, tight Bollinger Bands, and the statistically calm demeanor of the Index suggests a break down coming soon, but it may not be much more than a 5% drop.
VXX TRADE:
Today, the calm-before-the-storm indicator remains down and that suggests that VXX was still a buy as of Friday’s close.
This trade may take 1 to 3-weeks to play out; a big move up in VIX will move VXX up (about half as much). My sell signal is based on statistical analysis of movements of the S&P 500 and not actual movement of VIX or VXX.
BOLLINGER BAND SQUEEZE PLAY:
The Bollinger Band Squeeze-Play has ended, but in my opinion 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.
Indicators: My 10-day sum of 16 indicators improved from +8 to +11 Friday. Compared to yesterday, daily values were unchanged. Price action has stalled.
SHORT TRADE
I am still holding short positions.
MONEY TREND INDICATOR
My short-term Money Trend indicator can be volatile; Friday it is still flat; a neutral indication.
I’ve been predicting that this week would be down; it was up 3pts., about 0.2%
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 52.6% Friday. It was 54.1% Thursday. A number above 50% is usually GOOD news for the markets.
On a longer term, the 150-day moving average of advancing stocks improved to 54.5%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) declined from -5 (percentage calculation method) to -11.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) dropped to +154 Friday. (It was +201 Thursday.) The 10-day moving average of the change in spread slipped to -12. In other words, over the last 10-days, on average, the spread has decreased by 12 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
Friday, 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. I actually don’t think this is a great time to buy since it looks like a short-term top.
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.
