“Obama’s Trans-Pacific Partnership (TPP) is dead. Obama’s
Trans-Atlantic Trade and Investment Partnership (TTIP) is also dead on arrival.
Neither of those agreements is realistically about free trade. Both contain
inane provisions allowing corporations to sue governments. And TPP is mired in
global warming muck. Yet, the collapse of the agreements culminates a long
period of dwindling deals of any kind.” Commentary at….
HUSSMAN COMMENTARY (Hussman Funds)
-ON THE MARKETS: “We continue to expect 10-12 year
nominal total returns for the S&P 500 averaging about 1.5% annually, with a
likely market retreat of 40-55% over the completion of this cycle. Nothing in
the recent election results materially changes those expectations…”
-ON THE ELECTION:
“If we’ve learned one thing from the recent election
cycle, it’s that people on both sides of the political spectrum feel both
unheard and even threatened by the views of the other. Discontent, on either
side, is a signal that we’d better listen to each other to understand those
differences. When people feel unheard, their concerns find unexpected and often
undesirable ways of expression. Neither side will do much good for the country
by treating the other half of the nation as idiots… Some have suggested that it
should be the job of Democrats to deal with the distress of Democrats, and the
job of Republicans to deal with the distress of Republicans. I wholly disagree.
The first act of wisdom, and the first step toward peace and reconciliation, is
for each side to listen, nonjudgmentally, to the suffering - real or perceived
- of the other side. The job of any true leader, indeed, the mark of
any true leader, whatever their political persuasion, is to encourage that
understanding.” – John Hussman, Phd. Weekly Market Commentary from Hussman
Funds at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was unchanged at 2164 on the day.
-VIX rose about 3% to 14.53 at the close.
-The yield on the 10-year Treasury jumped again to 2.22%.
Bullish Indications:
1. My thesis is that the S&P 500 Index underwent a
correction with a correction low on 4 November.
While it seems odd to write about a correction of only 4.8% (top to
bottom), there are strong similarities with much larger corrections: (1) The
Index went 58-Days without a new high as it slowly declined to a interim low. The average correction takes 53-days top to
bottom. (2) At the end of the recent “correction”,
the last 10-days fell straight down creating the so-called “waterfall”
correction phase. (3)The bottom was near
a statistically significant down-day. (4) The bottom was indicated by falling
volume as selling dried up. These “correction-over” signals are quite bullish. The
current 2-day consolidation is fairly normal after a downturn as the S&P
500 consolidates.
2. The XLI vs. S&P 500 spread is still extremely
bullish. Since XLI is made up of industrial cyclical stocks and the XLI ETF is
outperforming the S&P 500, investors think that the economy is entering a
bullish cycle.
3. Short-term signals continue to improve and Market
Internals remained all-positive.
4. Sentiment pulled all the way back to 64%-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.
Bearish Indications.
1. The NYSE Composite Index never made a higher-high
after its prior high on 21 May 2015; surprisingly, it remains a full 5% below
the prior high.
2. VIX is stubbornly high.
3. The FOSBACK NEW-HIGH/NEW-LOW LOGIC INDEX is now
sending a bear signal for the short-term.
Both new highs and new lows are putting up big numbers. That divergence is not a healthy sign for the
markets.
4. The Index is close to the Bollinger Bands and that’s
somewhat bearish. RSI is in the middle
neither bearish nor bullish and that counters the Bollinger Bands.
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, but for now I still think the trend is up.
The S&P 500 is due for some consolidation so I am not
trading. Perhaps I’ll pick it up again
soon.
TRADING PORTFOLIO (Small-% of the total portfolio)
MONDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 48.6 %. (48.5 % yesterday.) A number below 50% is usually
BEARISH 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: improved from +13 to +21
(percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +21 (It was +37 yesterday.)
-10-day moving average of the change in spread: +4. In
other words, over the last 10-days, on average, the spread has increased by 4 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
Monday 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.
