“U.S. businesses posted fewer open jobs in February than
the previous month when openings reached a record level, though layoffs fell. The
Labor Department said Friday that openings fell 2.8 percent to 6.05 million,
down from 6.23 million in January, the most on record dating back to 2001.
Layoffs dropped a steep 7.7 percent, to 1.65 million.” Story at…
MICHIGAN SENTIMENT (MarketWatch)
“The University of Michigan’s consumer sentiment index in
April fell to a reading of 97.8, down from 101.4 in March. Economists polled by
MarketWatch expected a reading of 101.” Story at…
FED IS BEHIND, BUT STILL SCREWING UP (McClellan Financial
Publications)
“…having the Fed reduce the size of its balance sheet
carries an enormously powerful effect on banking system liquidity…the FOMC is
going to realize that its reduction of holdings of Treasuries and MBS is creating
a big liquidity problem…I expect that realization to hit them sometime around
August 2018, and it should lead to a huge stock market rebound into
year-end. But it will be a rebound from a big selloff.” – Tom McClellan. Commentary
and analysis at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was Down about 0.3% to 2656.
-VIX was Down about 6% to 17.41.
-The yield on the 10-year Treasury slipped to 2.825%.
I noted yesterday that the most
recent 4-highs have been 2659, 2663, 2664 and 2664; the Index needed to break
thru this area of resistance to trigger more buying. It didn’t happen today so the
market is looking somewhat more bearish, especially from a chart perspective.
The chart-pattern on the S&P 500 since the end of
March is a classic “ascending triangle”. The top is in the vicinity of 2664.
The Index broke higher today, but it was not able to hold it there. As noted by
Investopedia, this is a bearish pattern.
Chart Example from…
-My daily sum of 17 Indicators slipped from +4 to +0; the
10-day smoothed version dropped too, from +25 to +22. The bullish swing of the Indicators may be
over. Advancing volume was also down.
Correction Update:
Today was trading-day 54 since the prior top. The S&P
500 was 7.5% below the top and was 2.6% above the prior correction bottom. On average, corrections >10% have lasted
68-days…Corrections <10% have lasted 32-days. The S&P 500 is 2.2% above
its 200-dMA (day moving average).
My bet is that we will dip
again and I expect that we will retest the 8 Feb low. At that point we should
have a better idea whether this correction will end or continue.
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. (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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals dropped
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. I previously reduced stock exposure on 31 Jan.
Intermediate/Long-Term
Indicator: Friday, the VIX, Volume, Price and Sentiment indicators were
neutral. Overall, the Intermediate/Long-term Indicator remains Neutral, but we
remain Defensive based on numerous signals.
