“The Personal Income and Spending report for September
was mostly in-line with expectations…
…The PCE Price Index was up 0.2% month-over-month and
1.2% year-over-year, which was up from 1.0% year-over-year in August and
tracking toward the Fed's longer-run inflation target of 2.0%... it left
every reason to think the Fed is still on a path to a rate hike before the end
of the year.” Commentary and charts at…
CHICAGO PMI (MarketWatch)
“A measure of Chicago-area economic activity faltered in
October, suggesting the economy lost some momentum seen in the third quarter.
MNI Indicators said Monday the Chicago PMI fell to 50.6,
a drop of 3.6 points, bringing the index to its lowest level since May.” Story
at…
GUEST COMMENTARY (Raymond James)
“Last Friday we entered the strongest five days of the
year and the proverbial bullish carrot in front of the horse could be this week’s
FOMC meeting, Employment Report, and the ISM Manufacturing numbers. In point of
fact, tomorrow we enter the strongest six months of the year! For this week,
however, we expect the FOMC to be a non-event and for nonfarm payrolls to edge
higher. Speaking of “higher,” while our models are calling for higher stock
prices, so is the D-J Transportation Average…” – Jeffrey Saut, Raymond James,
31 Oct 2016. Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was unchanged at 2126 on the day.
-VIX rose about 5% to 17.06.
-The yield on the 10-year Treasury slipped to 1.83%.
Short-term indicators continue to be mixed.
The “Calm-Before-the-Storm” indicator (based on
statistical analysis of market action) was bearish again today. I have used VXX
in the past to take advantage of this indicator. That VXX trade is looking OK
for now, although I never did take a VXX position this time. The VXX trade is
up 4.4% from the day this indicator flashed negative in my system. Given that other indicators are not
confirming a turn down now, I‘d be inclined to take profits in this trade. (RSI was actually bullish Friday.)
Curiously, the day my calm-before-the-storm indicator
flashed negative, I saw the following on a trader board: “3.5 MM shares VXX
just got hit in AH, haven't seen that in a while, if ever.” That would be a VXX
purchase in the 100-million dollar range.
Monday was the fifth straight down-day and that suggests
an up day Tuesday or a possible bigger breakdown ahead. For now, I’m again guessing
Tuesday will be an up-day. (I guessed Monday would be up too, but I’ll take the
draw.)
All-in-all…mixed short-term signals continue so I have
not taken a short-term Trading Position.
Long-term, I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish.
TRADING PORTFOLIO
MONDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 49.3%. (48.3% yesterday.) A number below 50% is usually
BEARISH for the markets short-term.
-150-day moving average of advancing stocks: 52.8%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: improved from -45 to -38
(percentage calculation method).
-New-highs minus new-lows: -16 (It was -29 yesterday.)
New-lows again outpaced new-highs – not a good sign.
-10-day moving average of the change in spread: -2. In
other words, over the last 10-days, on average, the spread has decreased by 2
each day.
Market Internals
remained 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
Monday the VIX indicator is 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.
