“The dollar slumped on Tuesday after a report on the services side of the U.S. economy grew in August at its slowest pace since 2010, threatening to delay the Federal Reserve’s monetary policy plans. The Institute for Supply Management’s service-sector index slipped to 51.4% in August from 55.5% in the prior month—representing the weakest level since February 2010.” Story at…
http://www.marketwatch.com/story/dollar-meanders-as-investors-look-for-central-bank-clarity-2016-09-06
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up 0.3% to 2186 at the close.
-VIX rose about 0.3% to 12.02 at the close. (The Options Boys aren’t convinced the market is going higher...)
-The yield on the 10-year Treasury dipped to 1.54%. (…neither are the Bond Ghouls.)
For the last month the index has tried to break to new highs, but it hasn’t managed to get much above the 2183 that it registered on 5 August. Today’s close was only 3 pts higher so it is hard to get too optimistic given a number of negative indicators: Bollinger Bands and my Calm-Before-the-Storm indicator are still sounding the alarm. I have a topping indicator that is also flashing sell as of today, Monday. (I am beginning to think maybe it is the only top indicator I should use.) Here’s a chart of that topping Indicator going back to 2013 that shows when the indicator reaches -7% (the bottom red line) a top is usually close by. This indicator uses Market Internals and relates them to the S&P 500.
In addition, Friday was a big up-day statistically, and that is usually followed by some selling. As always, not all the indicators are negative: My short-term Money Trend indicator can be volatile; Monday it is trending slightly up; a neutral to slightly bullish indication. My sum of 16 Indicators is +3; also a slightly bullish indication. Market Internals are positive now, so perhaps the S&P 500 will manage to claw higher in spite of negatives.
Oil was up today and that seemed to trump the poor ISM number. Bad news is good news.
VXX Trade. The calm-before-the-storm indicator (low standard of deviation in recent market moves) still remains down. That suggests that VXX remained a buy as of Monday’s close.
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.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 53.9% Monday. It was 53.1% Friday. A number above 50% is usually BULLISH news for the markets.
On a longer term, the 150-day moving average of advancing stocks rose to 55.1%. A value above 50% generally indicates an up-trend. The McClellan Oscillator improved from -1 to +4 (percentage calculation method).
New-highs outpaced New-lows. The spread (new-highs minus new-lows) improved to +241 Monday. (It was +199 Friday.) The 10-day moving average of the change in spread was +16. In other words, over the last 10-days, on average, the spread has increased by 16 each day. Market Internals remained positive 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
Monday the Price indicator was positive; Sentiment, VIX and & Volume 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.
