“Job openings jumped and more people were hired in July, the Labor Department said Wednesday. The Labor Department’s job openings and labor turnover survey showed 5.87 million openings, an all-time high, while hires increased to 5.23 million from 5.17 million in June.” Story at…
http://www.marketwatch.com/story/job-openings-soar-to-all-time-high-of-59-million-in-july-2016-09-07
FED BEIGE BOOK (WSJ)
“A tight labor market and rising wages aren’t generating substantial inflation pressure, a Federal Reserve report said Wednesday, muddying the economic outlook for Fed officials ahead of their September policy meeting. Overall, the economy continued to expand at a modest pace in July and August, and respondents said they expected growth to continue at a “moderate” pace in the coming months…” Story at…
http://www.wsj.com/articles/fed-beige-book-economy-expanded-at-a-modest-pace-through-august-1473271622?mg=id-wsj
EARNINGS – excerpted from FACTSET EARNINGS INSIGHT
(FACTSET)
“For Q2 2016, the blended earnings decline for the S&P
500 is -3.2%. The second quarter marked the first time the index has recorded
five consecutive quarters of year-over-year declines in earnings since Q3 2008
through Q3 2009….The forward 12-month P/E ratio for the S&P 500 is 16.9.
This P/E ratio is above the 5-year average (14.8) and the 10-year average
(14.3)….”
Chart and earnings Insight at…
P/E RATIO
– NO. 1 BULL LIE (Marketwatch)“The U.S.
stock market’s P/E ratio is telling us in no uncertain terms that stocks are
hugely overvalued…When compared in an apples-to-apples way to historical norms,
the stock market is 50% overvalued…there is no reason that the high P/E
immediately dooms the market. But you may want to pick a new adviser if he
tries to argue that the stock market’s current P/E ratio is at or close to the
historical average.” – Mark Hulbert. Commentary at…
US STOCKS IN DANGER
(Marketwatch)
“For the past three weeks, the S&P
500 has shifted from a short-term uptrend to a sideways movement. Key market
indicators currently register not even one bullish signal. If this continues,
the market will not only top out, but could roll over.” Commentary at…
-Wednesday the S&P 500 was unchanged at 2186 at the close.
-VIX was down about 0.7% to 11.94 at the close.
-The yield on the 10-year Treasury dipped to 1.54%.
Once again the S&P 500 index was unable to get away from its tight trading range. It continues to look like trouble to me and I saw a piece that called it the “calm-before-the-storm” (the name I use for one of my indicators) as noted below:
"It does feel like a calm before a storm as we head into the next Fed meeting," said Mike Bailey, director of research at FBB Capital Partners, pointing to recently weak economic data. "People are starting to talk about that, whether it's noise or is it a sign of something scary coming ahead." More at…
http://www.cnbc.com/2016/09/07/us-markets.html
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. This indicator normally doesn’t hold at extreme low levels when other top indicators are flashing concerns for an extreme long time – it is now - so I am troubled by the trade that has not worked so far. The only good news is that the trading portfolio is relatively small.
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) dipped to 53.4% Wednesday. It was 53.9% Tuesday. A number above 50% is usually BULLISH news for the markets.
On a longer term, the 150-day moving average of advancing stocks remained 55.1%. A value above 50% generally indicates an up-trend. The McClellan Oscillator improved from +4 to +12 (percentage calculation method).
New-highs outpaced New-lows. The spread (new-highs minus new-lows) slipped to +232 Wednesday. (It was +241 Tuesday.) The 10-day moving average of the change in spread was +1. In other words, over the last 10-days, on average, the spread has increased by 1 each day. Market Internals switched 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
Wednesday 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.
