View From the Hill: Waiting For Yellen Before Selling?

Posted on Posted in Views From The Hill

By J Clinton Hill, Capital Markets Strategist @ Hillbent.com

Market Condition: August 25, 2016

bulls-and-bears4Overall, today’s data releases underscored the strength of the US economy. Tomorrow, which is Friday, Yellen will speak after concluding the Fed’s meeting at Jackson Hole. Investors from all asset classes will be taking cues from her remarks. Despite recent hawkish overtures from some members, the markets are still favoring the absence of a rate hike in September. Knowing its disdain for surprises,  anything contrary to expectations could trigger selling programs and perhaps a test @ 2150. The next resistance test is, of course, at the psychological break point @ 2200.

The stock market is still showing signs of gradual deterioration, in spite of its ability to achieve a new all-time high above 2191 on the S&P 500. The breadth in positive market momentum is waning. To make a case in point, if we take the percentage of S&P 500 components trading above their 20-day moving average and use it as an indicator, it has now crossed below its own 55-day moving average, which suggests potential for an accelerated breakdown in stocks. An even more widely followed indicator is the 50-day moving average, in which the percentage of blue chips trading above it has now crossed below the 22-day moving average.

 

sp500-wkly-8-25-2016
Click to enlarge

 


Market Moving Events

Bullish

  • North America / USA / Manufacturing: Durable Goods for July-2016 rebounded to 4.4% vs. consensus @ 3.7% vs. prior @ -4.0%. Ex-transportation, they expanded 1.5% vs. estimates @ 0.5% and prior @ -0.5%.
  • North America / USA / Employment: The latest Jobless Claims Report for the week of August-20-2016 confirmed continued strength in the labor market. New claims files remain near historically low levels @ 261k vs. estimates @ 265k and prior @ 262k. The 4-week moving average also dipped to 264k vs. prior @ 265.25k. Continuing Claims, a lagging indicator, were down 30k to 2.155mm.
  • Europe / UK / Consumer: Great Britain’s retail sector is showing signs of strength as its CBI Distributive Trades report for August-2016 came in @ 9 vs. consensus @ 5 and prior @ -14.

Bearish

  • Europe / Germany / Business Sentiment: Germany’s Ifo Survey for August-2016 showed a drop in Economic Sentiment from 108.3 to 106.2 while Business Expectations declined to 100.1 from 102.2. This latest data left many wondering if the expected negative impact of Brexit is beginning to emerge.

Neutral

  • n/a

 


ETF Market Performance: date

There will be no comments for this evening’s ETF summary analysis. (Please see our exchange traded funds performance table below.)

 

1YR RS Equities Close % Chg 50D-MA 200D-MA 50-v-200
 Equities
92 DJ-30 Industrials (DIA) 184.37 -0.16% 1.05% 5.25% 4.16%
95 SP-500 (SPY) 217.70 -0.07% 1.69% 6.08% 4.32%
94 Nasdaq-100 (QQQ) 116.61 -0.16% 3.65% 7.12% 3.34%
96 Russell-2k (IWM) 123.31 0.20% 3.71% 10.17% 6.23%
69 EAFE (EFA) 58.72 -0.41% 2.78% 2.68% -0.10%
91 Emerging Mkts (EEM) 37.08 0.08% 4.16% 11.49% 7.04%
61 Europe FTSE (VGK) 48.87 -0.43% 2.93% 1.33% -1.56%
90 Latin America 40 (ILF) 28.51 0.04% 4.62% 18.05% 12.84%
90 Brazil (EWZ) 33.35 -0.66% 5.01% 28.71% 22.58%
86 Japan (EWJ) 12.31 -0.49% 3.36% 5.12% 1.71%
95 Pacific Ex-Japan (EPP) 41.77 0.02% 3.03% 8.41% 5.22%
72 FTSE China 25 (FXI) 37.09 -0.08% 5.07% 9.73% 4.44%
1 VIX Short-Term Futures (VXX) 36.99 0.08% -20.21% -48.02% -34.85%
Bonds / Fixed Income
83 20+ Yr Treasury (TLT) 139.17 -0.38% 0.14% 6.78% 6.63%
87 Aggregate Bond Fund (AGG) 112.52 -0.11% 0.07% 1.94% 1.87%
84 Treasury Inflation Protection (TIP) 116.15 -0.05% -0.01% 2.51% 2.52%
94 Investop Corp Bond (LQD) 123.79 -0.10% 0.69% 4.74% 4.02%
98 High Yield Corp Bond (HYG) 86.66 0.18% 1.64% 5.37% 3.67%
Currencies
25 US Dollar Bullish (UUP) 24.50 0.00% -1.05% -2.04% -1.00%
68 Euro Trust (FXE) 109.88 0.18% 1.12% 1.33% 0.20%
96 Japanese Yen Trust (FXY) 96.07 -0.08% 2.22% 10.40% 8.00%
Commodities
77 DB Commodity Index (DBC) 14.92 0.40% 0.81% 7.42% 6.55%
84 Gold (GLD) 126.23 -0.09% -0.67% 8.36% 9.09%
38 US Oil (USO) 10.95 1.20% 1.67% 2.62% 0.94%
Real Estate
84 DJ Real Estate (IYR) 82.52 0.36% -0.39% 7.24% 7.65%
90 DJ Home Construction (ITB) 29.19 0.17% 2.21% 8.88% 6.53%
80 Residential Real Estate Index (REZ) 66.39 0.71% -1.13% 4.03% 5.22%
Major Equity Sectors
92 Consumer Discretionary (XLY) 81.17 -0.33% 1.03% 3.97% 2.91%
86 Consumer Staples (XLP) 54.59 -0.38% -0.29% 4.54% 4.84%
90 Energy (XLE) 69.62 -0.27% 2.29% 9.33% 6.88%
84 Financials (XLF) 24.08 0.21% 3.04% 4.92% 1.83%
76 Healthcare (XLV) 72.79 -0.84% -0.90% 3.50% 4.44%
96 Industrials (XLI) 58.83 -0.02% 2.24% 7.67% 5.31%
96 Materials (XLB) 49.01 0.49% 2.21% 8.96% 6.60%
97 Technology / Info (VGT) 117.79 0.20% 4.71% 9.45% 4.53%
72 Telecom (IYZ) 32.01 0.50% -3.44% 5.23% 8.97%
77 Utilities (XLU) 50.19 0.06% -2.26% 5.44% 7.88%

 

 

Signing off @ Hillbent…

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