"New applications for U.S. unemployment benefits increased
more than expected last week, but the number of Americans on jobless rolls fell
to its lowest level since 1973, pointing to tightening labor market conditions.
Initial claims for state unemployment benefits rose 24,000 to a seasonally
adjusted 242,000 for the week ended March 31…”
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was Up about 0.7% to 2663.
-VIX was Down about 6% to 18.94.
-The yield on the 10-year Treasury was little changed at
2.815%.
Sentiment was 85%-Bulls measured on a 5-day basis in
selected Rydex Bull/Bear funds (Bulls/{Bulls+Bears}) Wednesday night. The
correction high was 26 Jan. and sentiment was 80% at the high. It peaked at
91%-bulls on 5 Feb as traders bought the dip. We are 47-days into a 10%
correction and Sentiment (%-bulls) has barely budged. It makes one highly
suspicious that the correction has played out.
…But it is not unprecedented. In the 12% correction of
August 2015, Sentiment was 78%-Bulls at the retest of the bottom. In that
correction, buy signals at the retest were fairly strong. Not this time. That’s
why I’m still on the sidelines.
-My daily sum of 17 Indicators remained at +4; the 10-day
smoothed version improved from -33 to -25.
Indicators are generally turning more bullish.
Correction Update:
Today was trading-day 48 since the prior top. The S&P
500 was 7.3% below the top and was 2.8% above the prior correction bottom. On average, corrections >10% have lasted
68-days…Corrections <10% have lasted 32-days.
I keep thinking the bottom might have been made on 2
April. The retest was a close call when I look at the data because it was very
close to a buy. We have seen decent buying since the retest on 2 April, but not
really strong enough to confirm a bottom. I have expected to see a confirmation
that the bottom is in for the last couple of days; but it hasn’t happened yet. We’ll
see. Futures are down as I write this so “out” may be the best place to be.
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. (5 Apr 2018. I found a graphing error in the Nike data. It has been fixed.)
*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 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
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: Thursday, the VIX indicator was bullish; the Volume indicator
was negative; Price and Sentiment were neutral. Overall, the Intermediate/Long-term
Indicator remains Neutral.
