“Durable-goods
orders jumped 3.1% in February, largely reversing a big drop at the
start of the year and posting the largest gain since last summer. Business
investment also rebounded in a good sign for the U.S. economy.” Story at…
HOME SALES (USNews)
“Sales of new U.S. homes slipped 0.6 percent in February,
a third straight monthly decline. But year to date, sales are up 2.2 percent
compared with 2017 in a sign that buyer demand remains solid.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was Down about 2.1% to 2588.
-VIX was UP about 7% to 24.87.
-The yield on the 10-year Treasury slipped to 2.815% as
investors again bought Bonds.
The S&P 500 didn’t make a lower low so it’s still not
at a point that we can make a call on whether the correction is over. We need
to see a lower-low at the close and see positive signs in the market data to be
a buyer in the market. As far as the indicators, there were mixed signals:
BEAR SIGNS
-My daily sum of 17 Indicators rose from -6 to -5 but,
the 10-day smoothed version fell from -6 to -15. That’s not encouraging.
Negative totals for indicators are bearish and the smoothed trend is down “bigley.”
NEUTRAL / MIXED SIGNS
-The Advance-Decline Ratio, Bollinger Bands and RSI all gave
oversold (bullish) indications. In reviewing prior corrections, the Advance-Decline
ratio has not reached levels low enough to match prior correction bottoms for
recent corrections in the 10-15% range. The same is true for RSI. RSI has
settled in the area of about +15 in the past and we’re not there yet. RSI was 27 today.
-TRIN (Traders Index aka, the Arms Index) was only 1.2
today and that is not a point that would normally signal a bottom. Numbers in the range of 2.2 and higher are usually
seen at bottoms.
-Smart Money {based on late day action} reversed downward
today, but not sharply.
BULL SIGNS
-Like yesterday, today was a statistically-significant,
down-day. That just means that the price-volume move down exceeded statistical
parameters that I track. The stats show that about 60% of the time a
statistically significant move down will be followed by an up-day the next day.
-Tick (sum of closing trades) was -142 at the close and
that is an area where it needs to be to make a bottom.
At this point, it looks like the Index will test the
prior low. It is now only 0.3% above the low (2581) and only 0.1% above its
200-dMA. Usually, the test is successful and the Index will move up quickly
after the test. Let’s hope that’s the case this time if it does in fact test
the low. We could always see another bounce.
In the meantime, I will wait for a test of the prior low and
stay alert for signs of an upward reversal. One never really knows – the markets
could decide the correction ended today, even though I think not.
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…
FRIDAY 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).
LONG TERM INDICATOR
Friday, the VIX and
Volume indicators were negative; Price and Sentiment were neutral. I have been
ignoring VIX, but as of today, it is combining with Volume to signal “Sell.” It hasn’t given that indication since 5
February, 4% before the low (so far) of this correction. This isn’t a great time
to sell. The long-term indicator can signal a sell at the bottom of a smaller
correction. If I wasn’t already out, I’d probably wait until we retest the low.
Hopefully, we’ll have a better idea then.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
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). This is a conservative retiree position. Previously, I had reduced
holdings on 31 Jan.
