“U.S. consumer confidence declined in March for the first
time this year on tempered optimism about the outlook for the economy, according
to figures Tuesday from the New York-based Conference Board.” Story at…
My cmt: Probably related to the stock market. Consumers
don’t like corrections.
TECHNICAL BREAKDOWN (MarketWatch)
“The stock market surged on
Monday but relinquished nearly all of those gains on
Tuesday. That is not a good sign. U.S. stocks already are coming off
the biggest weekly decline in more than two years, and the
aftermath of that drop has market technicians warning that major indexes are on
the verge of a full-fledged, technical breakdown.” Story at…
TECHNICALLY SPEAKING EXCERPT (Real Investment Advice)
“With the market oversold, we are looking for a rally to
the 100-dma [about 2693 Tuesday] to further rebalance portfolio risks. (We have been doing this
already over the last several weeks and have been underweight equity and
overweight cash.) However, my guess is we are not likely done with
this correctionary process as of yet.” – Lance Roberts. Commentary at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was DOWN about 1.7% to 2613.
-VIX was UP about 7% to 22.5.
-The yield on the 10-year Treasury fell to 2.776%. (Traders
were buying Treasuries today.)
There have been 3-days in this correction that have
exhibited extreme downside-volume, all within 33 trading-days. Based on market history, this is an extremely
bearish sign. So far, we have not seen
an upside reversal that has shown the type of up-volume required to suggest a
reversal and end to the correction. Other signs have been absent too. Breadth is not overly positive and not
indicative of a reversal; the Index has not yet tested (matched or fallen
below) the prior low at the close. I still can’t call a correction end yet. Given the high
sentiment I noted in Monday’s blog, we could have a lot further to go.
I imagine a lot of investors felt the correction was over
after Monday’s big jump up.
Unfortunately, these types of extreme moves are not all that uncommon in
a falling market. In fact, most really big down-moves, like Monday’s, happen in
down markets. All this begs the question, “Where do we go from here?” The problem
is, we don’t really know until we get some more clues. We continue to wait for a
reversal or a test of the prior low.
Here are a few technical issues:
-My daily sum of 17 Indicators improved from -11 to -7,
but the 10-day smoothed version fell from -26 to -36. Negative totals for
indicators are bearish and the smoothed trend is down.
The S&P 500 is now 9.1% from the prior high and about
1% above the prior low.
MOMENTUM ANALYSIS IS NOW NEARLY WORTHLESS. As one can see
below in both momentum charts, most of the issues I track are now in negative
territory, i.e., few have any upward momentum. That’s just an indication that
the market is in correction mode and most stocks have been headed down.
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
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)
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
Negative 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).
CURRENT PERCENTAGE IN STOCKS
21 March, I cut
stock holdings from 50% to 35% with the remainder in a mix of stocks and
(mostly short-term) bonds. (A comparable TSP allocation would be 35% in the
S&P 500 Index fund (C-Fund) with the remainder 65% G-Fund (Government
securities). Previously, I had reduced holdings on 31 Jan.
Tuesday, the VIX
and Volume indicators were negative; Price and Sentiment were neutral.
