“U.S. single-family starts surged in September, pointing
to sustained housing market strength even as a drop in the construction of
multi-family dwellings pushed overall home building activity to a 1-1/2-year
low. Groundbreaking on single-family housing projects, which accounts for the
largest share of the residential housing market, jumped 8.1 percent to a
783,000-unit pace last month….” Story at…
CRUDE INVENTORIES (Reuters)
“Oil prices rose about 2 percent on Wednesday after the
U.S. government reported a surprising drop in domestic crude stockpiles, versus
analysts expectations for a build…The Energy Information Administration (EIA)
said U.S. crude stocks fell by 5.2 million barrels in the week ended Oct. 14.”
Story at…
FED BEIGE BOOK (Bloomberg)
“The U.S. economy maintained a steady growth pace between
late August and early October, as a tight labor market with nascent wage
pressures contributed to a “mostly positive” outlook, a report from the 12
Federal Reserve districts showed.
“Most districts indicated a modest or moderate pace of
expansion,” according to the Fed’s latest Beige Book…” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.2% to 2144.
-VIX fell about 6% to 14.41.
-The yield on the 10-year Treasury remained 1.75%.
We had back-to-back days with good up-volume (78% and
76%) Tuesday and Wednesday. We haven’t seen that since last September after
investors decided Brexit was not such a big issue. That’s a decent sign and
suggests the markets will go up from here, although a down-day tomorrow would
not be a surprise.
A week ago the INDUSTRIAL SELECT SECTOR SPDR ETF (XLI) was
underperforming the S&P 500 on every time frame from 10 to 100-days. As a
cyclical ETF, it tends to underperform when investors are worried. Now the XLI
is outperforming the Index on half of the timeframes. That’s a good sign that the market is getting
more comfortable and is bullish in the near-term. Other Bullish signs remain.
“Money Trend” was up; “Sum of all indicators” was up. The
“Smart Money” indicator (late day action) was still trending down as of Wednesday’s
close. Still, short-term it now looks like the most likely near-term direction
is “up” for this week.
One troubling near-term sign: my calm-before-the-storm
indicator flashed red Wednesday. It is based on statistical analysis of market
action and it is suggesting that there may be trouble ahead. Another VXX trade
may be possible and I’ll need to be cautious with my 2xDow trade I established
Tuesday.
Long-term, I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I’m hold-my-nose bullish.
TRADING PORTFOLIO
2x Dow (DDM) Established 18 Oct.
(I am trading more than I like to in an effort to regain
losses from holding my short too long after the February correction. So far,
it has not worked out. Actually, I am up 3.2%, but with 3-straight losing
trades it has been disheartening.)
WEDNESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 48.3%. (47.3% yesterday.) A number below 50% is usually
BEARISH for the markets short-term.
-150-day moving average of advancing stocks: 53.4%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: improved from -20 to +3
(percentage calculation method).
-New-highs minus new-lows: 75 (It was 43 Tuesday.)
-10-day moving average of the change in spread: -2. In
other words, over the last 10-days, on average, the spread has declined by 2
each day.
Market Internals improved
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, VIX, 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.
