“The number of Americans filing for unemployment benefits
fell last week, pointing to sustained labor market strength and firming
economic growth. Initial claims for state unemployment benefits decreased 3,000
to a seasonally adjusted 258,000 for the week ended Oct. 22…” Story at…
The article pointed out that claims have been down for 86
straight weeks.
DURABLE GOODS ORDERS (Marketwatch)
“Orders for long-lasting goods made in the U.S. fell
slightly in September, a weak performance owing largely to lower demand for
military hardware and computers.
Business
investment also posted the biggest drop in seven months, reflecting
a tough environment for American manufacturers….” Story at….
KANSAS CITY FED MANUFACTURING (Kansas City FED)
“The Federal Reserve Bank of Kansas City released the
October Manufacturing Survey today. According to Chad Wilkerson, vice president
and economist at the Federal Reserve Bank of Kansas City, the survey revealed
that Tenth District manufacturing activity expanded again at a moderate pace.
“This was the second consecutive month of rising factory activity in the Tenth
District, the first time that has happened in nearly two years,” said Wilkerson.
“Much of the improvement recently has been in machinery and fabricated metals
manufacturing.” Press release at…
For a detailed charting and analysis of activity see Advisor
Perspectives at…
http://www.advisorperspectives.com/dshort/updates/2016/10/27/kansas-city-fed-survey-october-activity-continues-expansion
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dropped about 0.3% to 2133.
-VIX rose about 8% to 15.36 at the close.
-The yield on the 10-year Treasury rose to 1.84%. (Bond
prices fall when yields rise. It’s
unusual to see Stock and Bond prices both falling.)
The “Calm-Before-the-Storm” indicator (based on
statistical analysis of market action) was bearish again today.
I keep mentioning it because the indicator is highly
correlated with quick one-day market declines of 2-4%. Sometimes there is
follow thru with continued selling and sometimes not. The current activity of
falling S&P 500 prices along with declines in price variability isn’t the
norm. As prices fall, one would think
there would be more fluctuation in price not less. Currently, we see more uniformity and
calm. That is usually associated with a
rising market and complacency.
To make matters more confusing, my most reliable topping
indicator is moving toward signaling a top even as the Index falls – this too
is counter to the normal indicator/market action. I am left with the notion
that the market is likely to go up only to fail and fall from a higher point
than it is now. Market analysis is never that easy, or that precise, so it
could be that we see a big drop in the near term.
The Index has dropped below its 50-dMA and its 100-dMA
and that’s generally bearish. The Index (now 2133) is close to retesting the
2127 level from last week. That is a key point and we’ll see how it goes.
Short-term indicators continue to be mixed so I have not
taken a Trading Position.
Long-term, I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I’m hold-my-nose bullish.
TRADING PORTFOLIO
THURSDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 49.3%. (49.9% yesterday.) A number below 50% is usually
BEARISH for the markets short-term.
-150-day moving average of advancing stocks: 53.1%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: declined from -21 to -41
(percentage calculation method).
-New-highs minus new-lows: -2 (It was 0 Tuesday.)
-10-day moving average of the change in spread: 0. In
other words, over the last 10-days, on average, the spread has remained
unchanged 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
Thursday 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.
