“Sales of newly constructed homes surged, and earlier
estimates were revised up, painting a rosier picture of the housing market than
many economists had expected.” Story at…
CONSUMER CONFIDENCE (Bloomberg)
“U.S. consumer confidence unexpectedly rose in April to
the second-highest level since 2000 as Americans grew more upbeat about both
current conditions and the economic outlook, according to figures Tuesday from
the New York-based Conference Board.” Story at.
“Overall, confidence levels remain strong and suggest
that the economy will continue expanding at a solid pace in the months ahead."
– Lynn Franco, Director of Economic Indicators at
The Conference Board. Press release at…
EARNINGS INSIGHT EXCERPT (Factset)
“-Earnings Scorecard: For Q1 2018 (with 17% of the
companies in the S&P 500 reporting actual results for the quarter), 80% of
S&P 500 companies have reported a positive EPS surprise and 72% have
reported a positive sales surprise.
-Earnings Growth: For Q1 2018, the blended earnings
growth rate for the S&P 500 is 18.3%. If 18.3% is the actual growth rate
for the quarter, it will mark the highest earnings growth since Q1 2011
(19.5%).” Earnings Insight at…
5 INDICATORS TO WATCH – EXCERPT (Real Investment Advice)
“…we currently maintain short-term equity exposure to the
markets as the bullish trend that begin in 2009 remains intact. However, we
currently holding a higher level of cash than normal as a hedge against
volatility and the lack of a positive risk/reward backdrop with which to
deploy “risk” capital.”
– Lance Roberts. Commentary at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dropped about 1.3% to 2635.
-VIX was Down about 10% to 18.02.
-The yield on the 10-year Treasury rose to 2.994%.
This has been a tough correction to call since market
internals at the retest of the low were not as robust as we would have liked, i.e.
I didn’t quite get a Buy signal. As a result, we are forced to read other less trust
worthy tea leaves to try and make sense of the market. Today, we note that an
interesting trend: since the low on 23 March there have been 3 significant lows
with drops of 2.3%, 2.2% and today’s 1.3%. Each has occurred with improved
market internals compared to the low.
This suggests better conditions within the markets and tends to
reinforce my call that the correction has seen its low. Of course, I didn’t see
today’s drop coming, but the current high level of volatility brings big swings
in price, so it’s too soon to panic.
-My daily sum of 17 Indicators declined from -1 to -5;
the 10-day smoothed version dipped from +21 to +12. We need to hope this
bearish trend ends soon. Some of this is because of today’s big drop. It will worry
me more if there is a negative follow thru on the day tomorrow, Wednesday.
The Chart remains mired in a downtrend and would need to
break above about 2700 to make a run at changing the trend. The 150-dMA of
advancing stocks remains above 50% (51.5%) so the current trend is short-term
and not set in stone.
As noted several times, for the last 4 days Smart Money has
been buying late in the day even on the down days. This indicator is positive
and is moving solidly up – a bullish indication. Closing Tick has been positive
too. It was +314 Today and the 10-dMA of closing Tick was 243. In spite of the bearish
way the market has been acting recently, there has been a fair amount of bullish
late action.
Money Trend is still positive, but its pace of rise is slipping.
I got back in at a fully invested position because of
falling VIX. VIX has been rising since
then and is now giving a neutral signal. I think we need to consider the
possibility that a retest of prior lows is likely and it may fail – if it does,
I will probably cut stock holdings again. If we see a successful test I’ll be
adding to stocks.
MOMENTUM ANALYSIS IS STILL QUESTIONABLE BUT GETTING
BETTER. As one can see below in both momentum charts, there are still a lot of
issues in negative territory, i.e., they have weak 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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals declined
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).
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. For me,
fully invested is a balanced 50% stock portfolio. This is not the time to take
extra risk.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Tuesday, the VIX, Volume, Price and Sentiment indicators were
neutral. Overall this is a NEUTRAL indication. VIX was giving a Buy signa just
3-days ago.
