U.S. consumer prices increased in January, with a gauge
of underlying inflation posting its largest gain in 12 months, bolstering views
that price pressures will accelerate this year…consumer prices as measured by
the personal consumption expenditures (PCE) price index, rose 0.4 percent.”
Story at…
My cmt: This is believed to be the FED’s favorite
inflation gauge.
JOBLESS CLAIMS (MarketWatch)
“The
rate of layoffs as measured by U.S. jobless claims fell to the lowest level
since 1969, reflecting the strongest labor market since the end of the dotcom
boom nearly two decades ago. Initial U.S. jobless claims fell by 10,000 to
210,000 in the seven days ended Feb. 24…” Story at…
ISM INDEX (MarketWatch)
“The Institute for Supply Management said its manufacturing index rose to 60.8% in February,
up from 59.1% in January, to reach the highest level since May 2004.” Story at…
CONSTRUCTION SPENDING (Bloomberg)
“Even with solid U.S. economic growth, construction
spending rose in 2017 by the least in six years, as nonresidential building
slowed and outlays by governments declined. The value of construction put in
place increased 3.8 percent to $1.23 trillion last year…” Story at…
AUTO SALES (Reuters)
“Major automakers reported lower U.S. new vehicle sales
for February on Thursday as consumer demand continued to cool despite strong
crossovers and SUV sales, but surprisingly weak pickup truck sales dented the
share prices of Detroit carmakers.” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 1.3% to 2678.
-VIX was up about 13% to 22.47.
-The yield on the 10-year Treasury slipped to 2.817%.
Today, my sum of 17 Indicators slipped from -2 to -4. Negative
numbers are bearish since this is just a sum of positive and negative
indicators. The smoothed version has stalled and remains neutral. The Index has
fallen below its 50-dMA so now it will have to break above it before we feel
more positive.
Bearish Signs:
-Volume was higher today for the 5th day in a
row with each day having more volume than the previous day. Fear is still going
up on the NYSE.
-UP volume has been falling. The 10-dMA of up-volume was
only 46%. Less than half of the volume has been up over the last 2-weeks.
-Sentiment was a very high 87%-bulls. Sentiment is
warning of a top not a bottom.
-Market Internals switched to negative today.
-It’s been 3 weeks since the bottom on 6 Feb and the Smart
Money, indicated by late day action, has only been buying on 4-days. Late day
action was positive today, but that’s only a small step.
-When we compare Breadth (%-of stocks advancing) vs. the
S&P 500, the diversion does not support the current Index price. The Breadth
vs. the SP 500 indicator is much closer to warning of a top (as it did on 24
Jan) than calling a bottom.
-New-high/new-low data is falling and is bearish.
-VIX is rising at a fast pace.
-The 5-10-20 Timer (bearish if the 5dEMA, 10dEMA are
below the 20dEMA) turned bearish again today after being bullish for 1-day.
Bullish Signs:
-Money Trend has been headed up, but it has stalled and
may turn down very soon.
-Tic was a positive 122. The 10-dMA of closing Tic was 21
today and -233 at the 6 Feb bottom. A number below zero is where bottoms are
formed (according to Tom McClellan).
-Thursday was a statistically-significant 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. Bottoms are usually
statistically significant so this might be a higher low and correction end. I
said that a few days ago. The chart looks a little more like it might happen now…we’ll
see.
Unfortunately, though, charts are not much help; I can
make a bullish or bearish case. The Index is 2% below its 50-dMA and I’d feel a
lot better if the S&P could get above the 50-dMA.
On the other hand, IF the Index retraces to the prior
low, we should have the information to decide whether the correction is really
over. The Index is 3.7% above its prior 8 Feb low so we may not have long to
wait if the market continues to fall.
Rather than get whipsawed again (out then in quickly), I’ll
remain at 50% invested in stocks, but I may just act impulsively and bailout –
tomorrow needs to finish up. I am not optimistic on the market right now and
another down day on even higher volume will be troubling to say the least.
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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
dropped to 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
Thursday, the VIX
indicator was negative; Volume, Sentiment and Price were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
Today, 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.
