“Wholesale inventories increased 0.1% month-over-month in
September…The key takeaway from the report is that the inventory-to-sales ratio
held steady at 1.33, which points to the potential for some improved pricing
power if demand picks up; however, there is a still a ways to go there
considering that ratio stood closer to 1.20 a few years ago.” Commentary and
charts at…
CRUDE INVENTORIES (OilPrice.com)
“The latest American Petroleum Institute (API)
report shows a crude oil build more than two times larger than experts
expected, after last week’s government report revealed a record 14.4 million
barrel increase in
domestic inventories. The API reported a 4.4-million-barrel build in oil
supplies…” Story at…
SMALL BUSINESS OPTIMISM INDEX (NFIB)
“Small business owners are rattled by uncertainty and
unable to decide whether to expand, whether to hire, or whether to make other
important decisions that might boost the economy, according to the National
Federation of Independent Business (NFIB) Small Business Economic Trends
report, released today. “The data contained in this report shows record levels
of uncertainty among small business owners, and it is tied directly to the
election,” said NFIB President and CEO Juanita Duggan.” Press release at….
OFF TOPIC POLITICAL COMMENTARY
I didn’t support Donald J. Trump for a number of reasons,
but especially because his stated plan (cutting taxes and increasing spending)
will double the National Debt…again…and that scares me; but I do have thoughts
about why he is President elect.
There are political lies and damn lies. That old joke comes to mind: How do you tell
a Politician is lying? His lips are moving. The electorate forgives the lies
told by Politicians who promise a chicken in every pot because they know it’s a
lie. They don’t forgive damn lies like
Bush’s “Weapons of mass destruction” claim. That led to a Republican loss in
the House; Senate; and the Presidency. Now we have an election following Obama’s
damn lie: “You can keep your health care plan…” Much like the Republicans in
2008, if the Democrats want to find the cause of Trump’s win, they need only
look in the mirror.
PETER THIEL ON TRUMP (CNBC)
"I think one thing that should be distinguished here
is that the media is always taking Trump literally. It never takes him
seriously, but it always takes him literally. ... I think a lot of voters who
vote for Trump take Trump seriously but not literally, so when they hear things
like the Muslim comment or the wall comment, their question is not, 'Are you
going to build a wall like the Great Wall of China?' or, you know, 'How exactly
are you going to enforce these tests?' What they hear is we're going to have a
saner, more sensible immigration policy." – Peter Thiel, billionaire
investor, Facebook Board Member
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 1.1% to 2163 on
the day.
-VIX fell about 23% to 14.38 at the close.
-The yield on the 10-year Treasury jumped up to 2.07%. (On
a percentage basis that’s an 11% increase in the yield. That’s an unusually large move.)
Volume was huge (yooouge in Brooklynese) Wednesday,
nearly 2-thirds above the monthly average. Financials were up more than 4%
(XLF-ETF) as were Health Care and infrastructure stocks like Caterpillar. The
FANG tech stocks fell; Amazon was down 2%. A lot of the volume was repositioning
by the pros.
Bullish signs: Short-term signals improved again and are
headed up; the Index broke above 2132 its upper down-trend line (on a closing
basis); Market Internals flipped to all-positive; the INDUSTRIAL SELECT SECTOR
SPDR ETF (XLI) is outperforming the S&P 500 on all time-frames from 10-days
to 100-days.
On the bearish side the Bollinger Bands are now nearly
overbought and that is a bit worrisome. RSI is in neutral territory so I am not
too concerned about the Bollinger Band signal…yet. Wednesday was a
statistically-significant day and that means that price-volume exceeded my
statistical parameters and, in about 60% of the time, that leads to a down-day
the next day (Thursday).
Sentiment remains high, but that is a long-term indicator
and it may remain elevated for a considerable time. Other long-term indicators
are improving.
Short-term I took a long position in the SSO a 2x-long
S&P 500 ETF Wednesday morning.
Long term I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish. Short-term worries appear to be resolving to
the bullish side.
TRADING PORTFOLIO (Small-% of the total portfolio)
2x S&P 500 (SSO) Established 9 Nov.
WEDNESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 45.2 %. (43.3 % yesterday.) A number below 50% is usually
BEARISH for the markets short-term.
-150-day moving average of advancing stocks: slipped to
52.8%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: improved from -21 to +2
(percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +83 (It was +35 yesterday.)
-10-day moving average of the change in spread: +8. In
other words, over the last 10-days, on average, the spread has increased by 8
each day.
Market Internals improved
to 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
Wednesday the Sentiment indicator was negative. The Price
& VIX indicators were positive. Volume was 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.
