“Empire Manufacturing Falls Deeper Into Contraction. The
New York Federal Reserve’s gauge of manufacturing activity in the region fell
in October. The gauge fell to a negative reading of 6.8 from a negative reading
of 1.99 in September.” Story at…
INDUSTRIAL PRODUCTION (Reuters)
“U.S. industrial production barely rose in September as a
rebound in manufacturing and mining output was offset by surprisingly weak
demand for utilities…Still, the mixed report from the Federal Reserve on Monday
suggested that the industrial sector downturn has probably run its course.”
Story at…
CAPACITY UTILIZATION (Business Insider)
“….capacity utilization fell to 75.4%,
lower than economists expectations of 75.6%, and last month's 75.5%
reading.” Story at….
http://www.businessinsider.com/industrial-production-and-capacity-utilization-september-2016-2016-10
MARKET REPORT / ANALYSIS
-Monday the S&P 500 slipped 0.3% to 2127.
-VIX rose about 0.6% to 16.21.
-The yield on the 10-year Treasury slipped to 1.77%.
Monday the S&P 500 closed 1.7% below the 50-dMA and
only 2.8% above the 200-dMA so it’s not a great looking chart now. Further, the Index has closed below its trend
line (going back to the low in June of 2016) on successive trading days. So the
chart is neutral to negative. “Money Trend”, “Sum of all indicators” and “Smart
Money” (late day action) are all pointed down as of Monday’s close. These indicators
continue to suggest that the most likely direction for the markets this week is
down.
One of the few bullish signs is Bollinger Bands. The
S&P 500 Index is near its lower Bollinger Band and that is a bullish indicator.
Another is the old Overbought/Oversold Ratio (Advance Decline Ratio); it is now
oversold. RSI was 38. A reading of 30 or below would be a
bullish sign.
The Index is 2.8% down from its all-time high so perhaps
a fall of another 2.8% to the 200-dMA, or there about, would put an end to the
downdraft. We’ll see.
Long-term, I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – that’s hold my nose bullish.
TRADING PORTFOLIO
2x Short Dow 30 (SDOW): Established 17 Oct. This move was
based on negative indicators from Friday and as noted above.
MONDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 42.5%. (42.7% yesterday.) A number below 50% is usually
BEARISH for the markets short-term.
-150-day moving average of advancing stocks: 53.5%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: declined from -49 to -53
(percentage calculation method).
-New-highs minus new-lows: 6 (It was 29 Friday.)
-10-day moving average of the change in spread: -5. In
other words, over the last 10-days, on average, the spread has decreased by 5
each day.
Market Internals remained
negative 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 VIX indicator was negative. Price, Volume,
& Sentiment indicators were neutral. Overall the long-term indicator
remained HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I increased stock allocation to 50% stocks in
the S&P 500 Index fund (C-Fund) Friday, 23 Sep in my long-term accounts
based on a number of indicators. Remainder is 50% G-Fund. This is a
conservative retiree allocation.
