“The pace of growth in the economy in the fourth quarter
of 2017 was boosted to 2.9% from 2.5%, reflecting the biggest increase in
consumer spending in three years and higher investment in business inventories.”
Story at…
HOME SALES (Bloomberg)
“A gauge of signed contracts to purchase previously-owned
U.S. homes increased in February for the first time in three months,
highlighting uneven progress in the industry, according to data released
Wednesday from the National Association of Realtors in Washington.” Story at…
CRUDE INVENTORIES (OilPrice.com)
“The American Petroleum Institute (API) has reported a
major surprise build of 5.321 million barrels of U.S. crude oil inventories for
the week ending March 23, with the market expected to respond by erasing last
week’s gains.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was DOWN about 0.3% to 2605.
-VIX was UP about 2% to 22.87.
-The yield on the 10-year Treasury slipped to 2.783%.
Major drops on 23 & 27 March, when compared to the
prior correction bottom, have exhibited improving market internals. This could be signaling that fear is
subsiding and perhaps this correction could end sooner; however, we still need
to test the low and it is always possible that panic conditions will occur when
we get there. We’ll have to wait it out.
Here are a few technical issues:
-My daily sum of 17 Indicators improved from -7 to -4,
but the 10-day smoothed version fell from -36 to -43. Negative totals for
indicators are bearish and the smoothed trend is down.
-Money Trend is still falling.
-Smart Money (based on late day action) is basically
flat.
-Over the last 10 days, only 43% of stocks on the NYSE
have advanced and 41% of the volume has been up-volume.
-The cyclical industrials are slipping compared to the
S&P 500. That happens when investors
are worried, so this signal is bearish.
-The 5-day Sentiment was 85%-bulls Tuesday. That’s a bearish
number, but not yet signaling an outright sell.
One bullish signal: Market Internals improved to Neutral.
Correction Update:
Today was trading-day 43 since the prior top. The S&P
500 is 9.3% below the top and 0.8% above the prior correction bottom. The prior low was 10.1% rom the top. In
recent years, on average corrections >10% last 68-days…<10% last 32-days.
Right now, everyone seems to think we’ll see a retest of
the low and that it will be successful; then we see a bounce up. When everyone
thinks one thing will happen, what usually happens is something completely
different. We’ll see.
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to 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).
INTERMEDIATE / LONG-TERM INDICATOR
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.
Intermediate/Long-Term
Model: Wednesday, the VIX and Volume indicators were negative; Price and Sentiment
were neutral.
