“After API’s Tuesday estimate of a 1.047-million-barrel crude
oil inventory draw pushed prices higher, the Energy Information Administration
added optimism by confirming a
draw, albeit a smaller one, at 1.1 million barrels.” Story at…
BEIGE BOOK (Marketwatch)
The Beige Book reported activity remained at “a modest to
moderate pace” in March and early April, the same rate as earlier in the year.
There were widespread concerns about trade policy. Overall wage growth was said
to be modest, and price gains seen as moderate.” Story at…
THE END IS NEAR – MORGAN STANLEY (CNBC)
"…we see peak margins and rate of change on organic
earnings growth coming by late 2018/early 2019 and believe we already saw peak
valuations before the tax bill was enacted," they said. "We advocate
a focus on sector and stock-specific alpha as these late-cycle dynamics portend
narrowing markets and a cyclical top for equities later this year, in
our view."
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was Up about 0.1% to 2709.
-VIX was Up about 2% to 15.60.
-The yield on the 10-year Treasury rose to 2.868%.
-My daily sum of 17 Indicators rose from +1 to +8; the
10-day smoothed version rose from +30 to +34. That’s a decent bullish move in the
indicators.
Correction Update:
Given that I moved back to a fully, though conservatively,
invested position in stocks, I must admit that it looks like the correction was
over on 2 April. If the advance-decline data had been better on the 2nd,
I would have called the bottom then. It was a close call. You can read more
about why I upped stock allocations from 35% to 50% in yesterday’s blog.
Basically, my long-term indicator gave a “Buy” indication and that had not
happened since the correction bottom on 2 April.
So here is a revised “Correction Over” update:
The correction top was 2873 on 26 Jan. The bottom
occurred on trading-day 45. Top to bottom the S&P 500 registered a drop of
10.1%. On average, corrections >10%
have lasted 68-days…Corrections <10% have lasted 32-days. The length of 45-days
is about what one would expect.
There is still a chance the
S&P 500 will retest the 8 Feb low, but I am following my long-term
indicator.
MOMENTUM ANALYSIS IS STILL QUESTIONABLE BUT IT SHOULD
IMPROVE. As one can see below in both momentum charts, many 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. (On 5 Apr 2018 I
corrected a coding/graphing error that has consistently shown Nike
incorrectly.)
*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 Positive 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
The Indicator slipped to Neutral on the market.
Intermediate/Long-Term
Indicator: Wednesday, the and VIX indicator remained positive; Volume, Price
and Sentiment indicators were neutral. Overall this is a NEUTRAL indication.
MY INVESTED POSITION
Wednesday, 18 Apr
2018 I increased stock investments from 35% to 50% based on the Intermediate/Long-Term
Indicator that turned positive on the 17th.
