“The Institute for Supply Management (ISM)
non-manufacturing index (NMI) shows the U.S. service sector grew at a faster
than expected pace in February. The NMI came in at 59.5% for the month, easily
beating the 58.8 median forecast.” Story at…
HUSSMAN COMMENTARY (Hussman Funds)
“On February 2nd, our measures of market internals
clearly deteriorated, shifting market conditions to a combination of extreme
valuations and unfavorable market internals, coming off of the most extremely
overextended conditions we’ve ever observed in the historical data. At present,
I view the market as a “broken parabola” – much the same as we observed for the
Nikkei in 1990, the Nasdaq in 2000, or for those wishing a more recent example,
Bitcoin since January… More realistically, whether we examine a 5-year or a
10-year horizon, present valuations are so extreme that we now project negative
S&P 500 total returns on both horizons.” – John Hussman, PhD. Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was UP about 1.1% to 2721.
-VIX was DOWN about 4% to 18.73.
-The yield on the 10-year Treasury was little changed at
2.884%.
Did the Index make a Higher Low on 1 March? I am usually
confused by higher-lows. It is a point on
the chart that shows the lower trend line is headed up and that’s a bullish signal
that the correction is over. The problem is that one can look at the current
chart and realize that there was also a lower-high on 26 February that indicates
a falling upper trend-line and that is bearish. The argument for a higher low
is that market conditions have improved a lot between the low on 8 Feb and the higher-low
on 1 March. Even so, negative signs still remain.
For example, while my sum of 17 Indicators rose from -11 to
-7 they are still negative. Negative numbers are bearish since this is just a
sum of positive and negative indicators. The smoothed version is slightly down,
too. Not everything is bearish.
Late-day action was flat to slightly down. Closing Tick
(sum of last trades of the day) was +90. Overall those numbers are slightly
positive. Breadth moved above 50% and that means over the last 10-days, more
than half the stocks on the NYSE have moved up.
The Index remains below its 50-dMA (2737) so now it will
have to break above it before we feel more positive.
I am still not sure where this market is going in the
short-run. But I’ll be a seller of the S&P 500 drops below 2700. (That
number will change as time goes by.)
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…
MONDAY 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).
LONG TERM INDICATOR
Monday, the VIX
indicator was negative; Volume, Sentiment and Price were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
27 February, I
increased stock holdings from 40% to 50% with the remainder in a mix of stocks
and (mostly short-term) bonds. (A comparable TSP allocation would be 50% in the
S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government
securities). This is a conservative retiree position.
