“The Federal Reserve has raised interest rates for the sixth time since the
Financial Crisis and signaled that at least two additional rate hikes are
coming in 2018. On Wednesday, the central bank announced an increase in its
benchmark interest rate target range by 0.25% to a new band of 1.5%-1.75%. This
move puts the effective fed funds rate at around 1.63%, the highest since
September 2008. All eight voting members of the FOMC voted in favor of
Wednesday’s decision.” Story at…
HOME SALES (USA Today)
“U.S. sales of existing homes rebounded in February after
declining for the previous two months, a sign that many Americans are still
looking to buy despite rising prices and a shrinking number of homes available
on the market.” Story at…
CRUDE INVENTORIES (OilPrice.com)
“The Energy Information Administration reported an
decline in crude oil inventories of 2.6 million barrels
for the week to March 16, pushing up prices in concert with rising Middle
Eastern tensions, worries about Venezuela’s production slide despite rising
output in the United States.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was Down about 0.18% to 2712.
-VIX was Down about 2% to 17.86.
-The yield on the 10-year Treasury slipped to 2.881% as
investors bought Bonds.
Over the last 10-days only 48% of the volume on the NYSE
has been advancing volume and only 49.6% of the stocks on the NYSE have
advanced.
My sum of 17 Indicators improved from -9 to -4, but the
10-day smoothed version fell too (from +7 to +3). That’s not encouraging. Negative
totals for indicators are bearish and the smoothed trend is down too.
Late-day action was down today but, over the longer term
it is still neutral. According to market lore, Pros trade late in the day.
New-high/new-low data continues down and remains bearish.
The S&P 500 broke the 50-dMA and my lower trend line Monday
and has stalled since then. If the trend was up, and one is never sure with so
many reversals happening during a correction, it now appears down.
Sentiment (%-Bulls in selected Bull-Bear Rydex Funds) climbed
to 88.5% yesterday. (Data isn’t available until later tonight.) That is not far
below the values seen during the dot.com bubble on a standard deviation
basis. Sentiment is giving a value that
is beginning to warn of a top, not a bottom.
As far as the correction goes here are some stats:
-Today was trading-day 38 measured from the top, assuming
we haven’t already seen the bottom. The average is 32-days for <10%
corrections and 68-days for corrections >10%, ignoring major crashes (from
top to bottom).
-The S&P 500 is 5.6% below its all-time high.
-The Index is 4.6% from the recent 8 Feb bottom.
The charts don’t look great since Monday’s drop broke the
50-dMA and the lower trend line on a closing basis.
All of this is evidence that the Index is more likely to
retest the prior low of 2558 last seen on 8 Feb. That is a key support point
but, there is no guarantee the correction would end there nor is there any
guarantee that the market WILL retest the prior low. It may just go up from
here.
Further, indicators aren’t screaming sell now. They were screaming sell at the top on 26
January and I cut back stock holdings on 31 January. I didn’t get a strong buy
signal when I jumped back in; the primary reason I got in was the market seemed
to be running away from me. Bottom line,
I can’t say I am confident in getting out now – I just think that risks appear
higher than rewards and indicators are mostly negative.
If the Index was able to climb back above 2770 it would
make me more constructive on a quicker, and more positive, resolution of the
correction.
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…
WEDNESDAY 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
Wednesday, the VIX
indicator was negative; Price, Sentiment and Volume were neutral.
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.
