“For Q3 2016, the blended earnings growth rate for the
S&P 500 is 2.9%. The third quarter marks the first time the index has seen
year-over-year growth in earnings since Q1 2015 (0.5%)…. The blended revenue
growth rate for Q3 2016 is 2.7%. The third quarter marks the first time the
index has seen yearover-year growth in sales since Q4 2014 (2.0%).” – FACTSET
My cmt: This further enforces that the earnings/sales
recession is over. Growth isn’t great, but at least its up.
MICHIGAN SENTIMENT (MarketWatch)
“Consumer confidence surged in early November, as
Americans said the economic outlook brightened. The University of Michigan’s
initial November sentiment reading, which was taken before the results of the
presidential election were known, jumped to 91.6 from 87.2 in October.” Story
at…
INTERESTING MAP & THE ELECTORAL COLLEGE SYSTEM
“The Electoral College was created for two reasons. The
first purpose was to create a buffer between population and the selection of a
President. The second as part of the structure of the government that gave
extra power to the smaller states.” Electoral College info at…
My cmt: I thought this was interesting, especially when
considering that Clinton won the popular vote. If it weren’t for the Electoral College
system, politicians would ignore most of the country and the country would be
controlled by the big population centers.
“Trump infrastructure plan may have a hard time finding
workers” (CNBC)
Story at…
My cmt: Duh. After the Government took over the education
system with “No Child Left Behind” most localities dropped vocational
education. The attitude was: Who needs bricklayers, plumbers, carpenters, electricians
or steel-workers? We want everyone to have a high-school degree and go to
college.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.1% to 2164 on
the day.
-VIX fell about 4% to 14.21 at the close.
-The yield on the 10-year Treasury remained 2.12%.
Markets remain bullish with every indication that they
will go higher. One wonders if they aren’t getting too carried away, but my
topping indicator isn’t in the Red yet.
Summary of indicators:
Bullish signs: Short-term signals continue to improve;
Market Internals remained all-positive; Friday I got another buy signal from
XLI vs. S&P 500 spread and that is a very rare bullish sign.
Since XLI is made up of industrial cyclical stocks and
the XLI ETF is outperforming the S&P 500, I conclude that investors think
that the economy is entering a bullish cycle.
On the bearish side: The Bollinger Bands remain nearly
overbought, but RSI is 54 and that’s in neutral territory so I am not too
concerned about the Bollinger Band signal.
Sentiment pulled all the way back to 68%-bulls (5-dMA) as
traders bet on a pullback. That’s good
for the bulls. It suggests the markets can go higher at least from a Sentiment perspective.
Long term I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish.
I was out all day and didn’t get to home in time to make
any short-term moves.
TRADING PORTFOLIO (Small-% of the total portfolio)
FRIDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 48.5 %. (47.1% yesterday.) A number below 50% is usually
BEARISH for the markets short-term.
-150-day moving average of advancing stocks: slipped to
52.5%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: improved from -5 to +12
(percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +31 (It was +106 yesterday.)
-10-day moving average of the change in spread: +6. In
other words, over the last 10-days, on average, the spread has increased by 6
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
Friday the Sentiment indicator was negative (but only because
the high prior sentiment is a hold-over number). The Price indicator was
positive. Volume & VIX 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 2016 in my long-term
accounts.
Remainder is 50% G-Fund. This is a conservative retiree allocation.
