“Index shows economic growth increased slightly in
October. The Chicago Fed National Activity Index (CFNAI) increased to –0.08 in
October from –0.23 in September. All four broad categories of indicators that
make up the index increased from September, but all four categories again made
nonpositive contributions to the index in October.” – Chicago Federal reserve.
Press release at…
For additional analysis of the CFNAI see commentary at…
ANOTHER BUBBLE (The Felder Report)
Chart from…
The following article is worth repeating…
STOCK MARKET TO SOAR (Safeaven.com)
“…no bull market has ever ended on a sour note [My cmt:
They end in euphoria.] …the crowd is skittish even though the market is trading
close to its highs. This is an unprecedented development, and it means that
this bull market is going to soar to heights that only a man under the
influence of some strong medicine could envision today.” - Sol Palha. Commentary at…
My cmt: I see the same thing in falling Sentiment
values. Investors have gotten much more
bearish over the last 2-weeks.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 0.75% to 2188 at the
close.
-VIX was down about 3% to 12.42 at the close.
-The yield on the 10-year Treasury remained 2.34%.
There are a couple of signs that stocks are getting
stretched. Closing Tick was 666 today
and that is a high number for the day. The
10-dMA of closing Tick is 396. A number
over 300 is an indication of an overbought market according to Tom McClellan.
(Closing tick is the sum of last trades of the day {up +1 or down -1} for all
NYSE stocks.) We also have the Advance/Decline ratio that is still indicating
overbought; Bollinger Bands remain near the upper band, and RSI is very nearly
overbought. Markets can remain overbought for a long time and my topping
indicator has not flashed sell yet; my guess is that the market can go higher,
but it is not clear how much. These are
short-term signals, so no need to panic even if overbought conditions are
setting up.
My sum of 16-indicators (another short-term indicator) is
now +5, down from +12 three days ago. It’s still positive so that’s good.
New-high/new-low data looks quite bullish.
Monday the S&P 500 closed above the prior high of 2190. I’d like to see another close above that level because it would add confidence in the rally. The NYSE Composite did not make a new high. Let’s hope it pushes higher soon. The NASDAQ Composite closed at 5369, 6% above its all-time high of 5060 from the dot.com bubble back in year 2000. Gee, by some measures, the Secular Bear Market that started in 2000 is over! The odd thing is that valuation is very high and this is not a good sign that we are starting a new Secular Bull market. Still, no need to guess – I am following my numbers.
I remain cautiously bullish short-term; Short term I have
a 2x S&P 500 ETF position in the Trading Portfolio.
Long term I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish. I continue to be concerned about rising
interest rates and the strengthening dollar, but for now I think the trend remains
up.
TRADING PORTFOLIO (Small-% of the total portfolio)
2x S&P 500 ETF (SSO) Established 15 Nov.
MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 56.4 %. (57.1 % yesterday.) A number above 50% is usually
BULLISH for the markets short-term.
-150-day moving average of advancing stocks: Rose to
52.4%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: rose to +137 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +183 (It was +102 yesterday.)
-10-day moving average of the change in spread: +14. In
other words, over the last 10-days, on average, the spread has increased by 14
each day.
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
Neutral on the market, but deteriorated slightly.
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 Sentiment indicator was neutral. The Price and
Volume indicators were positive. The VIX indicator was neutral. Overall the
long-term indicator remained BUY. This just means that the conditions have been
positive recently. The actionable
buy-signal was last August and September.
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 2016 in my long-term
accounts.
Remainder is 50% G-Fund. This is a conservative retiree allocation.
