“More Americans applied for unemployment benefits in the last week of November, but the pace of layoffs remained near a 15-year low amid a tightening labor market. Initial jobless claims rose 9,000 to a seasonally adjusted 269,000 in the period from Nov. 22 to Nov. 28…” Story at…
http://www.marketwatch.com/story/jobless-claims-climb-9000-to-269000-2015-12-03
FACTORY ORDERS
“U.S. factory orders rebounded in October after two prior
monthly declines, helped by rising demand for aircraft, computers and machinery…Factory
orders rose 1.5 percent in October…” Story at
http://abcnews.go.com/Business/wireStory/us-factory-orders-rise-oct-ending-streak-declines-35553760ISM SERVICES (WSJ)
“The U.S. service sector slowed its pace of expansion in November as business activity declined, but is still firmly in growth territory. The Institute for Supply Management’s nonmanufacturing purchasing-managers index fell to 55.9…” Story at…
http://www.wsj.com/articles/ism-services-pmi-falls-to-55-9-in-november-1449155573
MARKET REPORT / ANALYSIS
-Thursday, the S&P 500 fell about 1.4% to 2050 at the close.
-VIX rose about 14% to 18.11.
-The yield on the 10-year Treasury shot up to 2.33.
Commentators are falling all over themselves reminding us all that the market can’t go down in December; it is the best month for stocks. We must remember that on average, returns are only 1.5% for the month and December is down about 20% of the time.
SHORT TERM: Breadth cleared its “overbought” condition per the Adv/Dec Ratio Thursday, but it was overbought 4-straight days before today. As noted recently, that should signal a pullback. RSI was overbought at the recent 3 Nov top of 2110, but the market has not appreciably advanced since then so that’s another short-term, sell-signal.
The McClellan oscillator remained negative Thursday.
The S&P 500 is now 0.7% BELOW the 200-dMA. The slope of the 200-dMA is DOWN as of Thursday; that is signaling the trend is down, whether it will be long-term remains to be seen.
My guess remains that the market continues down. Possible support levels are: The 50-dMA on the S&P 500 is 2037, but since that is below the 200-dMA it is probably irrelevant. A 50% down retracement would put the market at about 1990. The chart looks like an important level is around 1930-1980. All of those levels should be watched for a possible buy signal. A retest of the 25 Aug low is still possible.
I have 2 indicators, one based on breadth (but not the overbought/oversold ratio) and one based on smart-money; both are still suggesting further downside ahead.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 49.8% Thursday vs. 55.7% Wednesday. (A number below 50% is usually BAD news for the markets. On a longer term, the 150-day moving average of advancing stocks fell to 49.2%. A value below 50% indicates a down trend.
The McClellan Oscillator (a Breadth measure) remained negative Thursday.
New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-129. (It was -60 Wednesday.) The 10-day moving average of the change in spread was -8 Thursday. In other words, over the last 10-days, on average; the spread has decreased by 8 each day. The internals remained neutral on the markets but another down day will likely switch this indicator to negative.
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).
Of course, few trend-following systems will do well in an extreme
low-volatility, nearly straight-up year like 2014.
NTSM
Thursday, the NTSM long term indicator was HOLD. The Price indicator is positive. Sentiment, VIX & Volume are neutral. I remain skeptical that this is a good time to get in. My prior blog posts explain the reasoning. The market needs to break out higher before I will be convinced.
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
All cash: G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 100%
I made a rather impulsive sell decision. For my reasons (or lack of reason) see “My Invested Stock Position” in my prior blog at...
http://navigatethestockmarket.blogspot.com/2015/11/factset-earnings-cass-freight-index.html
There have been enough major top indicators recently to warrant more caution than usual.
One needn’t be “all-out” to be well protected if there is a bear market. In fact, I don’t recommend it. For example: With 30% invested in the stock market, one would only lose 15% of the portfolio if the market were to be cut in half; one would have plenty to invest at the bottom and 30% in stocks hedges the bet if the markets go up.
