UNEMPLOYMENT CLAIMS (CNBC)
The number of Americans filing for unemployment benefits
rose less than expected last week, pointing to a further tightening in labor
market conditions. Initial claims for state unemployment benefits edged up
1,000 to a seasonally adjusted 260,000 for the week ended Sept. 10…” Story at…
PPI (24/7WallSt)
“Thursday’s report showed that the headline inflation
reading for PPI was flat at 0.0% in August…Core PPI…in the annual report…jumped
by 1.0% [compared to August of 2015].” Story at…
My cmt: Overall little inflation and no reason for the
FED to hike based on these numbers.
PHILADELPHIA FED (EconomicCalendar.com)
“The Philadelphia Fed manufacturing outlook index strengthened to 12.8 for
September from 2.0 the previous month. This was the first time since August
2015 that there have been two consecutive readings above zero…” Story at…
EMPIRE MANUFACTURING
The Empire State Manufacturing index rose
slightly to -2.0 in September…The index is still stronger than August,
however, when it unexpectedly
slumped to -4.2.”
Story at…
INDUSTRIAL PRODUCTION (WSJ)
“U.S. industrial output declined last month, highlighting
tepid demand for manufactured goods and slow growth across the broader economy.
Industrial production, a measure of output at factories, mines and utilities,
fell a seasonally adjusted 0.4% in August, the Federal Reserve said Thursday.”
Story at…
RETAIL SALES (Reuters)
“U.S. retail sales fell more than expected in August amid
weak purchases of automobiles and a range of other goods, pointing to cooling
domestic demand that further diminishes expectations of a Federal Reserve
interest rate increase next week.” Story at…
GDP NOW
Some called today’s reports “dour” and the Atlanta Fed
reduced its GDP NOW value to 3%. Overall though, 3% is a lot better than last
quarter’s official GDP print of 1.1%.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 1% to 2147 at the
close.
-VIX was down about 10% to 16.3 at the close.
-The yield on the 10-year Treasury remained 1.7%.
I wrote yesterday, “The area around 2124 to 2120 has held
for several days so perhaps the pullback won’t really get going”. I might have
stated it better by saying the Index closed at 2127 9 Sep; and then again on 13
Sep; and slightly lower on lower volume on 14 Sep. This hints that the pullback
is not going to happen now. Thursday’s big up-day reinforced that feeling.
Thursday, my collection of 16-indicators improved from
-10 to -6. The trend of Indicators is improving,
but they are still pointing down, but so this one is a mixed bag.
New-highs outpaced new-lows today, not by much, so this
stat will be important Friday to see if it continues to improve.
On the bearish side, my Money Trend indicator remains headed
sharply down Thursday as it has been for several days. This indicator is still flashing “Sell” short-term;
so overall the most likely market direction is down. I’d like to see some
confirmation in the charts. A drop below the prior low of 2126 on higher volume
would confirm the bearish position. Otherwise, it will necessitate cutting back
on short positions.
VXX Trade. As posted earlier today, I sold VXX for a 7%
gain in 29-trading days. The idea of selling SH at a loss to buy VXX worked out
more or less. The SH shares were sold at a 12% loss. I really held them too long expecting a
pullback sooner. Since it’s questionable whether this pullback will keep going,
I decided to take profits in VXX. It can
move so much in a few hours one must be cautious.
SHORT TRADE
I am still holding short positions in SH (about half my
prior position) and QID. I didn’t sell any today. The possibility of further
declines is still reasonable and I will wait to see how the market reacts
Friday. As I write this, futures are down 0.2%.
Of course, that was true Wednesday evening and it was not a predictor of
Thursday’s action.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) rose to 50.6% Thursday. It was 46.9% Wednesday. A number above
50% is usually BULLISH for the markets short-term.
On a longer term, the 150-day moving average of advancing
stocks rose to 55.4%. A value above 50% generally indicates an up-trend. The McClellan Oscillator improved from -58 to
-28 (percentage calculation method).
New-highs outpaced New-lows. The spread (new-highs minus
new-lows) improved to +27 Thursday. (It was minus-6 Wednesday.) The 10-day
moving average of the change in spread was -7. In other words, over the last
10-days, on average, the spread has decreased by 7 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
Thursday the Price was positive. Sentiment & Volume indicators
were neutral. VIX was negative and the calm-before-the-storm indicator is
“carry-over negative”. Overall the
long-term indicator switched to HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I reduced stock allocation
to 30% stocks in the S&P 500 Index fund (C-Fund) Wednesday in my long-term
accounts based on the Sell signal on 13 Sep. 30% invested is a good amount
because in the unlikely event the index were to be cut in half, I would only
lose 15%. On the other hand, it keeps a
decent amount invested should the Index reverse up.
