ADP Employment … Jobless Claims … Crude Inventories …. Markit PMI … Stock Market Analysis

ADP EMPLOYMENT (MarketWatch)
“Private-sector employment picked up a bit in June, suggesting the weak May nonfarm-payroll report may be an anomaly, Automatic Data Processing Inc. reported Thursday. ADP reported that 172,000 private-sector jobs were added in June…” Story at…
http://www.marketwatch.com/story/private-sector-employment-picks-up-in-june-adp-2016-07-07
 
JOBLESS CLAIMS (Bloomberg)
“Filings for U.S. unemployment benefits unexpectedly declined last week to the lowest level since mid-April, signaling labor market stability amid a shaky global economy. Jobless claims dropped by 16,000 to 254,000 in the week ended July 2…” Story at…
http://www.bloomberg.com/news/articles/2016-07-07/fewest-americans-since-mid-april-file-for-unemployment-benefits
 
CRUDE INVENTORIES (Reuters)
“Oil prices fell nearly 3 percent on Thursday, reversing early gains after the U.S. government reported a weekly crude draw that was within analysts' forecasts, disappointing market bulls who had expected larger declines. The Energy Information Administration (EIA) said crude stockpiles fell 2.2 million barrels for the week ended July 1…” Story at…
http://www.reuters.com/article/us-global-oil-idUSKCN0ZN02A
 
MARKIT PMI (MishTalk)
“The divergence between the ISM non-manufacturing report and the PMI services report widened considerably today. The non-manufacturing ISM index rose from 52.9 to 56.5 but the PMI services index rose from 51.3 to 51.4. At least one of these measures portrays a considerably wrong picture…
…“Rebound, what rebound? The final PMI numbers confirm the earlier flash PMI signal that the pace of US economic growth remained subdued in the second quarter.” - Chris Williamson, Chief Economist at Markit
https://mishtalk.com/2016/07/06/pmi-services-essentially-flat-non-manufacturing-ism-jumps-huge/
 
MARKET REPORT / ANALYSIS        
-Thursday the S&P 500 was down about 0.1% to 2098.
-VIX dropped about 1% to 14.76.
-The yield on the 10-year Treasury remained 1.39%.
 
The S&P 500 remains “overbought” when using the old stand-by Overbought/Oversold Ratio, a measure of the advance decline line. Neither Bollinger Bands nor RSI are currently oversold. 
 

As I noted yesterday, if there wasn’t an oversold indication I’d add some stocks to the long-term portfolio.  I sold in late December at 2063 so the S&P 500 is up about 2% higher now.  I haven’t had much discipline in my trading portfolio recently so I’d better show some in the long-term portfolio. That means adding stocks when the index climbs above my prior sell point.

 
There’s not much direction to the market right now.  It’s waiting for earnings, I imagine, and following oil prices.
 
MONEY TREND & SHORT TERM TRADING
I back-tested the Money Trend Indicator and added another rule related to long-term breadth.  RULES WERE: (1) Trade the slope of the 5-day smoothed value of the 10-dMA of Money Trend Indicator: Long for a positive slope and Short for a negative slope …AND… (2) Value of the 150-dMA of advancing stocks (Breadth): Long if Breadth is >50%; Short if 150-dMA of breadth is <50%. If (1) and (2) disagree, stay out. This plan would have been a net gainer of 8.8% for 2016 so far beating the buy & hold value of 2.6%.  In 2015 the rules underperformed the buy and hold value by 5.9%.
 
My short-term Money Trend indicator can be volatile; it turned marginally down Thursday, a neutral reading.  I continue to hold short positions mostly in SH and some in QID in the trading portfolio only. I imagine I’ll be dumping them (at a loss) and looking for better opportunities later. We’ll see.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) improved to 57.6% Thursday and remains “overbought” using the old overbought/oversold ratio. It was 56.4% Wednesday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks slipped to 52.3%. A value above 50% generally indicates an up-trend, but realistically, the trend has been flat for some time.  The McClellan Oscillator (a Breadth measure) dipped from +21 (percentage calculation method) to +18.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) dropped to +152 Thursday. (It was +204 Tuesday.) The 10-day moving average of the change in spread declined to +5. In other words, over the last 10-days, on average; the spread has increased by 5 each day. Market Internals remained neutral.

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, Price and VIX indicators were neutral. Volume (a variant of on-balance-volume) was negative. The long-term indicator remained HOLD.
 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 30 Dec I reduced my invested position in my retirement account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP) and on 15 Jan I reduced stock allocation to zero in long-term accounts. I remain in cash earning about 2%. 
 
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions.  All-in-all, it’s still questionable whether the S&P 500 will make new-highs.
 
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 13-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html

Trade Balance … ISM Services … FOMC Minutes … China Syndrome … The Case for Gary Johnson … Stock Market Analysis

TRADE BALANCE (BBC.com)
“The Commerce Department said the trade deficit rose to $41.1bn (£31.7bn) in May compared with $37.4bn in April…"Appreciation of the US dollar is weighing on the trade balance, making imports relatively inexpensive, while lowering the competitiveness of exports," said Emily Mandel of Moody's Analytics.” Story at…
http://www.bbc.com/news/business-36727814
 
ISM SERVICES (Marketwatch)
“The Institute for Supply Management’s service sector index jumped to 56.5% in June, a much stronger reading than expected and a sign the economy may have pushed past the rough patch it hit in May.” Story at…
http://www.marketwatch.com/story/ism-services-index-soars-to-565-in-june-2016-07-06
 
FOMC MINUTES (WSJ)
“Fed officials generally agreed at their June 14-15 meeting that it was “prudent to wait” for additional data before considering another rate rise, according to minutes of the session released Wednesday. They wanted more time to see if the economy would keep improving and that new threats wouldn’t emerge after the June 23 Brexit vote.” Story at…
http://www.wsj.com/articles/fomc-minutes-fed-officials-divided-on-rate-path-amid-uncertain-economic-outlook-1467828322
 
CHINA SYNDROME (MarketWatch)
‘China’s trajectory…resembles the one that led to the Great Depression, when the expansion of credit, loose monetary policy and a widespread belief that asset prices would never fall contributed to rampant speculation that ended with a crippling market crash. – Andy Xie
“The unwavering faith that the Chinese will somehow be able to successfully avoid anything more severe than a moderate economic slowdown by continuing to rely on the perpetual expansion of credit reminds us of the belief in 2006 that U.S. home prices would never decline…” – Kyle Bass, Hayman Capital Management.’ Story at…
http://www.marketwatch.com/story/this-economist-thinks-china-is-headed-for-a-1929-style-depression-2016-06-30
 
THE CASE FOR GARY JOHNSON (The Reformed Broker)
“…almost everyone I know and talk to repeatedly says things like “I wish there was a candidate who is fiscally conservative but socially liberal.” Like the Jacob Javitz Republicans of old. Well maybe this is the guy.” – Josh Brown
http://thereformedbroker.com/2016/07/03/the-case-for-gary-johnson/
 
MARKET REPORT / ANALYSIS        
-Wednesday the S&P 500 was up about 0.5% to 2100.
-VIX dropped about 4% to 14.96.
-The yield on the 10-year Treasury rose to 1.39%.
 
The S&P 500 remains “overbought” when using the old stand-by Overbought/Oversold Ratio, a measure of the advance decline line. Bollinger Bands and RSI are not currently indicating oversold. 
 
If there wasn’t an oversold indication I’d add some stocks to the long-term portfolio.  I sold in late December at 2063 so the S&P 500 is up about 2% higher now.  I haven’t had much discipline in my trading portfolio recently so I’d better show some in the long-term portfolio. That means some stock purchases may be necessary soon.
 
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; it turned sharply down Tuesday, but flattened out Wednesday, a neutral reading.  I continue to hold short positions mostly in SH and some in QID in the trading portfolio only. I imagine I’ll be dumping them (at a loss) and looking for better opportunities later. We’ll see.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) improved to 56.4% Wednesday and remains “overbought” using the old overbought/oversold ratio. It was 55.6% Tuesday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks increased to 52.4%. A value above 50% generally indicates an up-trend, but realistically, the trend has been flat for some time.  The McClellan Oscillator (a Breadth measure) was up from +13 (percentage calculation method) to +21.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) remained +204 Wednesday. (It was +204 Tuesday.) The 10-day moving average of the change in spread improved to +10. In other words, over the last 10-days, on average; the spread has increased by 10 each day. Market Internals remained neutral.

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, Price and VIX indicators were neutral. Volume (a variant of on-balance-volume) was negative. The long-term indicator remained HOLD.
 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 30 Dec I reduced my invested position in my retirement account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP) and on 15 Jan I reduced stock allocation to zero in long-term accounts. I remain in cash earning about 2%. 
 
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions.  All-in-all, it’s still questionable whether the S&P 500 will make new-highs.
 
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 13-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html

Factory Orders … Bull or Bear … Stock Market Analysis

FACTORY ORDERS (Reuters)
“New orders for U.S. factory goods fell in May on weak demand for transportation and defense capital goods, but growing order backlogs and lean inventories suggested the worst of the manufacturing downturn was probably over. The Commerce Department said on Tuesday new orders for manufactured goods declined 1.0 percent after two straight months of increases.” Story at…
http://www.reuters.com/article/us-usa-economy-factory-idUSKCN0ZL1M8
 
BULL OR BEAR (Advisor Perspectives)
“Was the March 2009 low the end of a secular bear market and the beginning of a secular bull?...  based on the underlying market valuation, one can make a strong case that the secular bear market hasn't ended.” See Doug Short’s discussion at….
http://www.advisorperspectives.com/dshort/updates/Secular-Bull-and-Bear-Markets
 
MARKET REPORT / ANALYSIS        
-Tuesday the S&P 500 was down about 0.7% to 2089.
-VIX rose about 5% to 15.58.
-The yield on the 10-year Treasury dropped to 1.37%. (Everyone wants to own the safety trade – US Treasuries.)
 
The S&P 500 remains “overbought” when using the Overbought/Oversold Ratio, a measure of the advance decline line. Bollinger Bands and RSI are not currently indicating oversold. 
 
Traders returned from the Holiday in a mood to sell.  Short-term indications are down or perhaps flat at best.  The long-term indicator is HOLD.
 
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; it turned sharply down Tuesday, a bearish reading.  I continue to hold short positions mostly in SH and some in QID in the trading portfolio only. I imagine I’ll be dumping them (at a loss) and looking for better opportunities later. We’ll see.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 55.6% Tuesday and remains “overbought” using the old overbought/oversold ratio. It was 60.6% Friday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks dipped to 52.3%. A value above 50% generally indicates an up-trend, but realistically, the trend has been flat for some time.  The McClellan Oscillator (a Breadth measure) fell from +47 (percentage calculation method) to +13.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +204 Tuesday. (It was +404 Friday.) The 10-day moving average of the change in spread slipped to +4. In other words, over the last 10-days, on average; the spread has increased by 4 each day. Market Internals switched to neutral.

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
Tuesday, the Sentiment, Price and VIX indicators were neutral. Volume (a variant of on-balance-volume) was negative. The long-term indicator remained HOLD.
 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 30 Dec I reduced my invested position in my retirement account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP) and on 15 Jan I reduced stock allocation to zero in long-term accounts. I remain in cash earning about 2%. 
 
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions.  All-in-all, it’s still questionable whether the S&P 500 will make new-highs.
 
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 13-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html

ISM Index … Construction Spending … Auto Sales … Stock Market Analysis

Have a great Fourth!
 
ISM INDEX
“U.S. manufacturers grew in June at the fastest pace in 15 months, signaling a clear if modest uptrend after a bout of extended weakness, a survey of executives found. The Institute for Supply Management said its manufacturing index jumped to 53.2% in June from 51.3% in May.” Story at… 
http://www.marketwatch.com/story/us-manufacturers-grow-at-fastest-pace-in-15-monthsism-finds-2016-07-01
 
CONSTRUCTION SPENDING (ABC News)
“U.S. construction spending fell for a second month in May, with weakness hitting all areas of building. Construction spending declined 0.8 percent in May following a 2 percent tumble in April, the Commerce Department reported Friday. The April figure had been the biggest monthly setback in five years.” Story at…
http://abcnews.go.com/Business/wireStory/us-construction-spending-fell-40276814
 
AUTO SALES
“General Motors and Toyota saw sales fall and Ford Motor and Fiat Chrysler Automobiles saw them rise as automakers Friday reported June sales of new cars. Overall, the industry had saw a boost of 2.5%, Autodata reports.”  
http://www.usatoday.com/story/money/2016/07/01/us-auto-sales-june-2016/86608788/
 
MARKET REPORT / ANALYSIS        
-Friday the S&P 500 was up about 0.2% to 2103.
-VIX dropped another 6% to 14.77.
-The yield on the 10-year Treasury dipped to 1.46%.
 
The S&P 500 remains “overbought” when using the Overbought/Oversold Ratio, a measure of the advance decline line. Bollinger Bands and RSI are not currently oversold. 
 
Volume was very low today, before the Holiday, so today’s data is suspect at least for developing indicators.  Perhaps next week the picture will be clearer. 
 
New highs seem possible with improving ISM numbers and most indicators improving. Earnings season is starting and that will decide the near-term fate of the market.
 
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; it flattened Friday, and is now neutral.  I continue to hold short positions mostly in SH and some in QID in the trading portfolio only. I imagine I’ll be dumping them (at a loss) next week and looking for better opportunities later.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 60.6% Friday and remains “overbought” using the old overbought/oversold ratio. It was 60.3% Thur. A number above 50% is usually GOOD news for the markets, but over 60%-advancing is very high, especially if the 20-day value climbs above 55%-advancing. Those numbers have been followed by declines in the past. They were that high before the Brexit fiasco. The numbers are only a whisker below those extremes now.
 
On a longer term, the 150-day moving average of advancing stocks remained 52.5%. A value above 50% generally indicates an up-trend, but realistically, the trend has been flat for some time.  The McClellan Oscillator (a Breadth measure) climbed from +43 (percentage calculation method) to +47.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +404 Friday. (It was +379 Thursday.) The 10-day moving average of the change in spread slipped to +30. In other words, over the last 10-days, on average; the spread has increased by 30 each day. Market Internals remained positive along with most of my Indicators.

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, Price, Volume and VIX indicators improved to neutral. The long-term indicator remained HOLD.
 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 30 Dec I reduced my invested position in my retirement account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP) and on 15 Jan I reduced stock allocation to zero in long-term accounts. I remain in cash earning about 2%. 
 
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions.  All-in-all, it’s still questionable whether the S&P 500 will make new-highs and now we must wonder whether the correction low of 1829 will be tested.
 
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 13-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html