Tuesday, February 20, 2018

Trump Budget … John Hussman Commentary Excerpt… Correction Over? Maybe Not … Stock Market Analysis … ETF Trading … Dow 30 Ranking

TRUMP BUDGET (MishTalk)
"…fiscal expansion [in the Trump Budget] is probably the most foolhardy escapade in modern economic policy, and the timing of the fiscal stimulus that is utterly ridiculous and will only accelerate the collapse of US financial markets as the Fed hikes rates even more quickly.” Albert Edwards, Society General. [Rising interest rates are a serious problem. Here’s the chart…]
Commentary at…
 
JOHN HUSSMAN, PHD, MARKET COMMENTARY EXCERPT (Hussman Funds)
[Commentary published in early February.]
“The chart below shows our current best-fit parameterization of Sornette’s log-periodic structure, applied to the S&P 500 Index. Notably, unless we allow for the slope of the current market advance to become quite literally infinite, it’s impossible to closely fit the current price advance without setting the “finite-time singularity” – the point at which instability typically emerges – within a few days of the present date. Notably, the singularity is not the date of a crash. Rather, it’s the point where the pitch of the advance reaches an extreme, which may simply be an inflection point (as has been the case for other structures in recent years) or a pre-crash peak.” – John Hussman.
Commentary and Chart at…
[This does not give the dates of a crash nor does it suggest that the recent market trouble is part of a crash. It does show we need to be cautious.]
 
CORRECTION: NOT OUT OF THE WOODS YET (Real Investment Advice)
“While the immediate consensus is the ‘bear market of 2018’ is now over, there are several important points…that should be considered.
-        …the upper red “trendline” may provide some overhead resistance temporarily and is worth watching closely.
-        While the market did get oversold on a short-term basis, which suggested a bounce was likely, the longer-term overbought condition, and subsequent ‘sell signal’ remain intact.” – Lance Roberts. Commentary at…
 
MARKET REPORT / ANALYSIS         
-Tuesday the S&P 500 was down about 0.6% to 2716.
-VIX was UP about 6% to 20.6.
-The yield on the 10-year Treasury rose to 2.89%. (Yields have been rising since September. This isn’t good for the markets.)
 
The S&P 500 remains down 5.4% from its recent high; this is day 17 in the correction. If the bottom was 8 Feb (the recent low), then this “correction” lasted 10-days top to bottom.  A 2-week correction is awfully short and difficult to believe.
 
My sum of 17 Indicators improved from +3 to +6 today – a bullish indication. The smoothed version has turned up and is bullish too. I’d be surprised if Indicators weren’t turning more positive after the 5% bull-move we’ve had recently. At this point the chart and 50-dMA is more important than the indicators.
 
We still can’t guess whether there will be a retest of the low or not. A typical correction includes a waterfall collapse (it seems to be over) followed by a bounce (we got the bounce), a lot of choppiness and then a retest of the low over a period of about 50-trading days. We’ll see. It is all up to the chart. Friday the S&P 500 was sitting slightly (0.3%) above 50-dMA; now it’s 0.4% below it.  The 50-dMA is a critical point for the Index. If we can break significantly above the 50-dMA and stay there it would suggest this correction is more likely to end quickly.
 
TODAY’S RANKING OF  15 ETFs (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.  While momentum isn’t stock performance per se, momentum is closely related to stock performance. For example, over the 4-months from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed the S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked in the top 3 Momentum Plays for 52% of all trading days in 2017 (if I counted correctly.) XLK was up 35% on the year while the S&P 500 was up 18%.
*For additional background on the ETF ranking system see NTSM Page at…
 
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.
*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…
 
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained 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                                                        
Tuesday, Volume was positive; VIX was negative; Sentiment and Price were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40% invested in stocks and 60% in cash as of 31 Jan (A comparable TSP allocation would be 40% in the S&P 500 Index fund (C-Fund) with the remainder 60% G-Fund (Government securities). For non-Government employees holding short-term bonds would be OK rather than 60% cash.

Friday, February 16, 2018

Housing … Michigan Consumer Sentiment … Stock Market Analysis … ETF Trading … Dow 30 Ranking

HOUSING (Reuters)
“U.S. homebuilding increased to more than a one-year high in January, boosted by a rebound in the construction of single-family housing units, and further gains are likely as building permits soared to their highest level since 2007.” Story at…
 
CONSUMER SENTIMENT (MarketWatch)
“The University of Michigan said its consumer-sentiment index rose to a reading of 99.9 in February, up from 95.7 in January and the second-highest level in 14 years.”  Story at…
 
MARKET REPORT / ANALYSIS         
-Friday the S&P 500 was up about a point to 2732.
-VIX was down about 2% to 19.46.
-The yield on the 10-year Treasury slipped to 2.875%.
 
The S&P 500 is Sitting slightly (0.3%) above 50-dMA. That’s not enough to say that the Index has broken thru its 50-dMA on the road to recovery.
 
The S&P 500 remains down 4.9% from its recent high; this is day 16 in the correction. If the bottom was 8 Feb (the recent low), then this “correction” lasted 10-days top to bottom.  A 2-week correction is awfully short and difficult to believe.
 
My sum of 17 Indicators improved from 0 to +3 today – a bullish indication. The smoothed version has turned up and is bullish too.
 
I’d be surprised if Indicators weren’t turning more positive after the 5% bull move we’ve had this week. We still can’t guess whether there will be a retest of the low...or not.
 
We’re still waiting, so to repeat: The S&P 500 remains in a zone that is critical. If the Index can move higher (or break above Fibonacci resistance level for believers), a “V” correction is likely with the Index making a quick recovery near the prior highs is more likely. If not, the bounce may be over and the correction may look more like the typical correction that includes a lot of choppiness after the bounce and a retest of the recent low. We’ll see.
 
TODAY’S RANKING OF  15 ETFs (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.  While momentum isn’t stock performance per se, momentum is closely related to stock performance. For example, over the 4-months from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed the S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked in the top 3 Momentum Plays for 52% of all trading days in 2017 (if I counted correctly.) XLK was up 35% on the year while the S&P 500 was up 18%.
*For additional background on the ETF ranking system see NTSM Page at…
 
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.
*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…
 
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals were 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                                                        
Friday, Sentiment, Price and VIX Indicators were negative; Volume was neutral.
 
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40% invested in stocks and 60% in cash as of 31 Jan or 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government securities). For none Government employees holding short-term bonds would be OK rather than 60% cash.

Thursday, February 15, 2018

Jobless Claims … Producer Price Index (PPI) … Empire Manufacturing … Philadelphia FED … Industrial Production … Stock Market Analysis … ETF Trading … Dow 30 Ranking

“Warren Buffett – the Oracle of Omaha himself – admitted that he doesn’t know how the QE [Quantitative Easing] experiment will end. And if you think well-meaning economists running central banks know, you may have another thing coming.” - Vitaly Katsenelson
 
JOBLESS CLAIMS (Reuters)
“The number of Americans filing for unemployment benefits rebounded from a near 45-year low last week, but remained below a level that is associated with a tightening labor market. Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 230,000 for the week ended Feb. 10...
PPI…” Story at…
 
EMPIRE MANUFACTUIRNG (xinhuanet)
“Manufacturing firms in U.S. New York State reported that business activity continued to expand, though at a somewhat slower pace than last month, according to a report released on Thursday. The February Empire State Manufacturing Survey showed its headline general business conditions index fell five points to 13.1…” Story at…
 
PHILLY FED (Nasdaq.com)
“A report released by the Federal Reserve Bank of Philadelphia on Thursday unexpectedly showed a faster rate of growth in regional manufacturing activity in the month of February. The Philly Fed said its index for current manufacturing activity climbed to 25.8 in February from 22.2 in January, with a positive reading indicating growth.” Story at…
 
INDUSTRIAL PRODUCTION (CNBC)
“U.S. factory output was flat for the second straight month in January, raising questions about the manufacturing outlook as production dropped in the aerospace, plastics and food industries…. Overall industrial production fell 0.1 percent in January…” Story at…
 
MARKET REPORT / ANALYSIS         
-Thursday the S&P 500 was up about 1.2% to 2731.
-VIX was down about 0.7% to 19.13.
-The yield on the 10-year Treasury slipped to 2.903%.
 
We saw High unchanged-volume today. That’s a sign that investors are confused; some think it is a bearish sign, although I was never able to confirm that as an indicator. Either way, we are at a possible trouble point for the bulls.
 
The Fibonacci resistance levels are 38.2%, 50%, and 61.8%. We are now at the 50% retracement level. If the Index were to go 2% higher it would be the at the 61.8% retracement level. So, we are reaching zones where the bounce may stall, if you believe that sort of thing.  I’ve always thought a return half-way to the previous high was a point of high resistance – without using the “F” word. A more important fact may be that a bounce after a big drop in a “normal” correction usually stalls in this zone. Subsequently, I’d expect a lot of turbulence followed by an eventual re-test of the low.  This may not be a normal event – we’ll see.
 
The S&P 500 is down 4.9% from its recent high; this is day 15 in the correction. If the bottom was 8 Feb, then this “correction” lasted 10-days top to bottom.  A 2-week correction is awfully short and difficult to believe.
 
My sum of 17 Indicators improved from -4 to 0 today – a neutral indication. The smoothed version is still headed down.
 
Repeating: The S&P 500 remains in a zone that is critical. If the Index can move higher for another day or two (or break above Fibonacci resistance level for believers), a “V” correction is likely with the Index making a quick recovery near the prior highs is more likely. If not, the bounce may be over and the correction may look more like the typical correction that includes a lot of choppiness after the bounce and a retest of the recent low. We’ll see.
 
TODAY’S RANKING OF  15 ETFs (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.  While momentum isn’t stock performance per se, momentum is closely related to stock performance. For example, over the 4-months from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed the S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked in the top 3 Momentum Plays for 52% of all trading days in 2017 (if I counted correctly.) XLK was up 35% on the year while the S&P 500 was up 18%.
*For additional background on the ETF ranking system see NTSM Page at…
 
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.
*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…
 
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained Neutral 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                                                        
Thursday, Sentiment, Price, Volume and VIX Indicators were negative; New-High/New-Low data was positive.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40% invested in stocks and 60% in cash as of 31 Jan or 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government securities). For none Government employees holding short-term bonds would be OK rather than 60% cash.

Wednesday, February 14, 2018

Consumer Price Index … Retail Sales … Crude Inventories … Trump Budget … Stock Market Analysis … ETF Trading … Dow 30 Ranking

CONSUMER PRICE INDEX (MarketWatch)
“The consumer-price index leaped 0.5% in January to mark the biggest increase in five months, adding to recent worries about rising inflation. The cost of rent, clothes, gasoline, health care and auto insurance all rose.” Story at…
 
RETAIL SALES (Reuters)
“U.S. retail sales unexpectedly fell in January, recording their biggest drop in nearly a year, as households cut back on purchases of motor vehicles and building materials. The Commerce Department said on Wednesday that retail sales decreased 0.3 percent last month…” Story at…
 
CRUDE INVENTORY (OilPrice.com)
“After reporting two consecutive weekly crude oil inventory builds, this week the EIA continued with another build, of 1.8 million barrels for the week to February 9."
 
TRUMP BUDGET (Financial Sense)
“President Trump released his first budget proposal yesterday. At first glance, it looks pretty ugly where the concept of fiscal responsibility is concerned… Assuming the future plays out as he proposes, President Trump’s tenure in office would appear set to add the second-most amount of debt to the nation’s total public debt outstanding of any US President, following only Barack Obama’s dubious achievement.”
 
MARKET REPORT / ANALYSIS         
-Wednesday the S&P 500 was up about 1.3% to 2699.
-VIX was down about 23% to 19.26.
-The yield on the 10-year Treasury slipped to 2.922%.
 
The S&P 500 is down 6.1% from its recent high; this is day 14 in the correction. If the bottom was 8 Feb, then this “correction” lasted 10-days top to bottom.  A 2-week correction is awfully short and difficult to believe.
 
My sum of 17 Indicators deteriorated from -2 to -4 today. (A “-” number means that most indicators are bearish.) The 10-day versions of this indicator (designed to avoid the daily fluctuation) was flat – a neutral indication. The smoothed version is still headed down.
 
Changes from yesterday’s indicators are more bearish than not and I won’t list them all here. But some key ones:
-New-high/new-low data turned down and is now negative on the market.
-Money Trend is still falling; it didn’t turn up as I guessed it might yesterday so this indicator is still bearish.
 
The S&P 500 is in a zone that is critical. If the Index can move higher for another day or two and new-highs can outpace new-lows, a “V” correction is likely with the Index making a quick recovery near the prior highs is likely. If not, the bounce may be over and the correction may look more like the typical correction that includes a lot of choppiness after the bounce and a retest of the recent low. We’ll see.
 
TODAY’S RANKING OF  15 ETFs (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.  While momentum isn’t stock performance per se, momentum is closely related to stock performance. For example, over the 4-months from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed the S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked in the top 3 Momentum Plays for 52% of all trading days in 2017 (if I counted correctly.) XLK was up 35% on the year while the S&P 500 was up 18%.
*For additional background on the ETF ranking system see NTSM Page at…
 
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.
*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…
 
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained Neutral 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, Sentiment, Volume and VIX Indicators were negative; Price remained neutral.
 
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40% invested in stocks and 60% in cash as of 31 Jan or 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government securities). For none Government employees holding short-term bonds would be OK rather than 60% cash.

Tuesday, February 13, 2018

Small Business Optimism … Stock Market Analysis … ETF Trading … Dow 30 Ranking

SMALL BUSINESS OPTIMISM (Washington Post)
“Optimism among small companies in the U.S. rose more than forecast in January, fueled by a record number of owners who said now was a good time to expand, according to a National Federation of Independent Business survey released Tuesday…Six of the 10 components that make up the small-business optimism index increased in January, producing one of the strongest readings in the 45-year history of the survey.” Story at…
 
MARKET REPORT / ANALYSIS         
-Tuesday the S&P 500 was up about 0.3% to 2663.
-VIX was down about 3% to 24.97.
-The yield on the 10-year Treasury slipped to 2.829%.
 
The S&P 500 is down 7.3% from its recent high; this is day 13 in the correction. If the bottom was 8 Feb, then this “correction” lasted 10-days top to bottom.  A 2-week correction is awfully short and difficult to believe.
 
My sum of 17 Indicators improved from -8 to -2 today. (A “-” number means that most indicators are bearish.) The 10-day versions of this indicator (designed to avoid the daily fluctuation) turned up and that’s a bullish sign.  
 
BULL SIGNS
-New-high/new-low data is finally bullish and signaled a buy for this one indicator. (This is a good indicator.)
-Advancing-volume has been improving since the day before the 8 Feb low and improved today as well.
-The 10-dMA of Closing Tick is -132. A negative print is believed by some to be in the zone where bottoms are formed.
-RSI remains very close to a buy signal. It was a buy on the 8th and 9th of Feb.
-My long-term indicator improved to Hold.
 
NEUTRAL SIGNS
-Money Trend is still falling, but it is now looking like a turn to the upside is imminent and that would be bullish. (This indicator attempts to follow the general concept of Lowry Research and their supply and demand methodology for stock market analysis. Their concept is based on a detailed stock-by-stock analysis while mine is an estimate based on readily available Macro data.  Theirs is much more accurate, but that doesn’t mean mine isn’t useful.) It is most useful when it turns up after a market decline to confirm the up-move or suggest an impending up turn.
 
BEAR SIGNS
-Sentiment is still at very high levels, but it a bit less bullish, now at 81%-Bulls on the day.
-Only 44% of stocks on the NYSE have advanced over the last 10-days.
-Late day action is down over the last month and still suggests the Pros are cautious.
-The S&P 500 is still too far ahead of Market Internals.
-If the correction has bottomed already (on 8 Feb) then it was only 10-days long. The average is 53-days.
 
We didn’t see the strong up-day Tuesday with high up-volume, to convincingly determine the correction is over based on an established indicator. My new-high/new-low analysis does suggest this correction is over. It bothers me though. There have been many causes blamed for the start of the downturn: rising interest rates; inflation fears; FED unwinding of QE (causing rising interest rates); FED hiking of the Federal Funds Rate; dollar weakening, bullish sentiment; overvaluation (the median PE is higher than during the dot.com era); you name it. None of those issues have gone away. It seems to me that it should take more than 10-days to wash away those fears.    
 
Let’s see if there is a retest of the recent low – then we should have a better idea where this market is going. It will probably go higher first.
 
TODAY’S RANKING OF  15 ETFs (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.  While momentum isn’t stock performance per se, momentum is closely related to stock performance. For example, over the 4-months from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed the S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked in the top 3 Momentum Plays for 52% of all trading days in 2017 (if I counted correctly.) XLK was up 35% on the year while the S&P 500 was up 18%.
*For additional background on the ETF ranking system see NTSM Page at…
 
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.
*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…
 
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained Neutral 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                                                        
Tuesday, Sentiment, Volume and VIX Indicators were negative; Price remained neutral; New-High/New-low data is positive.
 
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40% invested in stocks and 60% in cash as of 31 Jan or 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government securities). For none Government employees holding short-term bonds would be OK rather than 60% cash.