As far as the week is concerned, the consolidation seems to be over. In reality my short and medium term oscillators bottomed during the week (Monday and Wednesday respectively), earlier than the Friday labor report. Both bottomed around the level of the September-October time-frame. We have anticipated that the market will be primed one way or the other prior to the Friday numbers, and it did. It seems the market reaction on Friday was that whatever price drop that was achieved earlier during the week was more than warranted by the actual labor numbers. In particular, the ISM numbers on Monday were significantly lower than expected, but all other numbers during the week seem to have some silver lining in them, including the "bad" labor report that showed the unemployment rate at 6.6% - slightly less than expected.
As far the DJIA, S&P 500, and NASDAQ Composite charts, again it was only the DJIA that showed a full-fledged consolidation, deep enough to show on the weekly charts. The other two had varying depth on the weekly charts, with the Composite effectively hardly registering a blimp on the weekly charts. Even then, this was a welcome breather, as things could not have continued at the pace that prices were accelerating at. The coming week does have some decent economic data to look forward to, but the most significant - - in my opinion - will be the FOMC minutes on the week after.
As for trading set action, as expected, it was the retail sector, including Disney (DIS), The Gap Inc. (GPS), and Nordstrom Inc. (JWN) that was most active. As for Abercrombie & Fitch (ANF), the action was outside numbers and earnings as it was in the form of the continued clipping of the wings of the CEO. AT&T (T) fired a significant salvo in a new price war, and this affected the stock prices of the whole telecom group. This might have quelled any attempt at recovery of this sector.
Other than retail, the recovery in industrials and railroad is starting to show. Treasury rates dropped but there were signs of stabilization towards the end. This again played well for mREITs in particular and Annaly (NLY), which is in my trading set, in particular. The repeated reminder here is that, given the Fed's stated goal of a 2% inflation, a rise in treasury rates still seems inevitable in the mid- to long-term. In any case, Gold (GLD)'s benefited overall of the weekly action.
My regular table for the indices follows.
|Index/ETF Symbol and Name||Daily 3-EMA-7||Weekly 3-EMA-7||Perceived Trend|
|SPX||S&P 500 Index||Down||Up||Neutral|
|DJIA||Dow Jones Industrial Average||Down||Up||Negative|
|COMP||NASDAQ Composite Index||Down||Up||Neutral|
|GLD||SPDR Gold Trust ETF||Up||Down||Positive|
|VIX||CBOE Volatility Index||Up||Up||Neutral|
|FVX||CBOE 5 Year Treasury Note Yield Index||Down||Up||Negative|
|TNX||CBOE 10 Year Treasury Note Yield Index||Down||Neutral||Negative|
|TYX||CBOE 30 Year Treasury Bond Yield Index||Down||Neutral||Neutral|
As usual, the reminder is that the movement of the treasury yields is negatively correlated with the price of the underlying instrument.
As for my trading set, my short term "Perceived Trend Oscillator" stood at a "neutral" value of -3% on Friday. The lowest value was a clear "oversold" of -78% on Monday - similar to the lowest reading in mid-October. This is in contrast of the "sold" reading of -40% in the previous week. This improvement, unlike last week, was shared by the mid-term indication of the "Daily 3-EMA-7″ column in the table below.
As such, I am assuming that this round of consolidation is over!
The full trading set table is as follows.
|Symbol and Company Name||Daily 3-EMA-7||Weekly 3-EMA-7||Perceived Trend||Is a Current Holding?|
|JPM||JPMorgan Chase & Co.||Down||Up||Neutral||Yes|
|GS||The Goldman Sachs Group, Inc.||Down||Neutral||Negative|
|WFC||Wells Fargo & Co.||Down||Up||Negative|
|NLY||Annaly Capital Management, Inc.||Up||Down||Positive|
|MO||Altria Group, Inc.||Down||Neutral||Negative||Yes|
|VZ||Verizon Communications Inc.||Down||Down||Negative||Yes|
|GPS||The Gap, Inc.||Up||Neutral||Positive||Yes|
|ANF||Abercrombie and Fitch Co.||Neutral||Down||Negative|
|DIS||The Walt Disney Company||Up||UP||Positive|
|MDLZ||Mondelez International, Inc.||Down||Neutral||Negative|
|BA||The Boeing Company||Down||Up||Negative|
|LMT||Lockheed Martin Corporation||Up||Up||Positive|
|DE||Deere & Company||Down||Up||Neutral||Yes|
|EMR||Emerson Electric Co.||Down||Neutral||Negative||Yes|
|DOW||Dow Chemical Co.||Up||Up||Positive|
|ADM||Archer, Daniels, Midland, Co.||Down||Neutral||Neutral|
|POT||Potash Corp. of Saskatchewan Inc.||Neutral||Neutral||Positive|
|BMY||Bristol-Myers Squibb Company||Down||Up||Negative|
|CSCO||Cisco Systems, Inc.||Up||Neutral||Positive||Yes|
|NGG||National Grid plc||Neutral||Up||Positive|
|WMB||Williams Companies, Inc.||Up||Up||Positive|
|WM||Waste Management, Inc.||Down||Neutral||Positive||Yes|
|NSC||Norfolk Southern Corp.||Up||Up||Positive||Yes|
Disclosure: It is important that you understand and agree that all information provided in this newsletter rely on publicly available data and tools with no guarantees of quality or suitability for any purpose, and that I can be long or short in any of my trading-set equities, at any time, with or without regard to indicated trends and described analytics, and that I do not give buy or sell or any other financial recommendations, and that any and all actions based on this commentary are solely the responsibility of the reader.