“U.S. consumer prices recorded their biggest increase in
six months in October on rising gasoline costs and rents, suggesting a pickup
in inflation that potentially clears the way for the Federal Reserve to raise
interest rates in December. The Labor Department said on Thursday its
Consumer Price Index increased 0.4 percent last month…” Story at…
HOUSING (Bloomberg)
“U.S. new-home construction jumped to a nine-year high in
October as an outsized advance in the number of apartment projects accompanied
a strong pickup for single-family housing. Residential starts surged 25.5
percent…” Story at…
JOBLESS CLAIMS (Bloomberg)
The fewest Americans since 1973 filed for unemployment
benefits last week, a sign that the U.S. labor market is getting tighter.
Jobless claims dropped by 19,000 to 235,000 in the week
ended Nov. 12, which included the Veterans Day holiday…” Story at…
PHILLY FED
“Manufacturing activity in and near Philadelphia fell more
than expected in November, according to a survey conducted by the regional
Federal Reserve. Its monthly index of current activity came in at 7.6…” Story
at…
My cmt: This reflects “modest” expansion.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.5% to 2187 on
the day.
-VIX was down about 3% to 13.35 at the close.
-The yield on the 10-year Treasury rose to 2.28%.
While there are many bears in the media and on CNBC, I am
bullish in the short-term and cautiously bullish in the long-term. It’s not
just me…
Table from Investing.com at…
The Fosbeck New-High New-Low Logic Index dropped back to
neutral today. The trend in both new
highs and new lows exhibiting high numbers has fallen off. When both new-highs and new-lows are high it
is usually a sign of trouble for equities. Thursday’s new-lows were 25 and that
is more the norm for an advancing market.
I suspect the high levels in both new-highs and new-lows were caused by
the sudden buying and selling associated with market rotation by the Pros in
reaction to the election. This time it may not be warning of a correction in
the broader markets. Still, one wonders
how much longer the rally will continue.
Santa here we come?
Breadth is beginning to get too bullish and the
Advance/Decline ratio is now indicating overbought; Bollinger Bands are very
near the upper band, but RSI is not yet overbought so my guess is that the
market can go higher. Now the S&P
500 is facing resistance at the prior high of 2190. If it can break higher that
may entice some more buyers.
Short-term indicators look good. 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.
THURSDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 57.5 %. (56.2 % yesterday.) A number above 50% is usually
BULLISH for the markets short-term.
-150-day moving average of advancing stocks: Slipped to
52.4%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: was nearly unchanged at +86
(percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +151 (It was +92 yesterday.)
-10-day moving average of the change in spread: +24. In
other words, over the last 10-days, on average, the spread has increased by 24
each day.
Market Internals
remained Positive 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 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.
The Lance Roberts Bond Commentary
(yesterday’s blog in the Fosbeck Logic Index discussion) seems like good advice
to me. Lance Roberts’ strategy (Buy
Bonds on the dip) gets ahead of the curve, especially in my TSP (Gov 401k
account) since I can’t hedge or short in other ways. The Total Bond market ETF
(BND) is down about 3% since September. That’s the F-fund in the TSP. If stocks
do fall Bonds will rise in price and the yields will fall. The current yield is
2.4%. I’ll do this on a sell signal for stocks.
