“U.S. hiring cooled in March following a strong February
while wages picked up, returning labor-market progress to a more sustainable
pace that keeps the Federal Reserve on track for further interest-rate
increases. Payrolls rose 103,000, compared with the median estimate of
economists for 185,000, after an upwardly revised 326,000 advance, Labor
Department figures showed Friday.” Story at…
AVERAGE EARNINGS (IBD)
“Average hourly wages rose 8 cents to $26.82 an hour,
lifting the annual gain to 2.7%, in line with expectations.” Story at…
TOO MUCH RISK NEAR THE END OF THE BULL (Financial Sense)
“The insurance company [Mass Mutual] surveyed 804
pre-retirees 10 to 15 years away from retirement, and 801 retirees, all who had
substantial assets…"Both retirees and pre-retirees say they worry that a
major downturn in the stock market and poor investment decisions could derail
their retirement. Yet many are focused on aggressive investment strategies…” - MassMutual Retirement Savings Risk Study. Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was Down about 2.2% to 2604.
-VIX was Up about 13% to 21.49.
-The yield on the 10-year Treasury dropped to 2.776%.
In addition to the 2% drop in price, today was another
huge down-volume day. More than 90% of the volume on the NYSE was down today.
That’s the 5th extreme down-volume day in a little more than
2-months. As previously noted, that is
extremely bearish and the down-trend can be expected to remain until it is
reversed by a high up-volume day that would signal a ground-swell of buying.
More unsettling, in the last 10-years, the only similar time
we’ve seen 5-down days with this percentage of down-volume in even a 6-month
period was in Nov 2008 during the Financial Crisis. The 90% down days we’ve
seen recently aren’t necessarily predictive of a crash, but it is certainly
something to be concerned about.
Another Bear sign is the spread between the Industrial Cyclicals
(XLI-ETF) and the S&P 500. When
investors are nervous they sell cyclicals since they are the most vulnerable in
a recession. Cyclicals are again
underperforming the S&P 500. The only good news is that today was so bad we
might see a bounce, although it is likely to be a “dead cat bounce”.
Today was a statistically-significant, down-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. We will probably see bounce from
here.
-My daily sum of 17 Indicators slipped from +4 to +1; the
10-day smoothed version improved from -25 to -18. Indicators are generally turning more
bullish.
Correction Update:
Today was trading-day 49 since the prior top. The S&P
500 was 9.3% below the top and was 0.8% above the prior correction bottom. On average, corrections >10% have lasted
68-days…Corrections <10% have lasted 32-days. The S&P 500 is only 0.4%
above its 200-dMA (day moving average). If it breaks below it we can expect
investors to get even more rattled.
I see no signs of an end to this correction at this point, but that could change quickly.
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 slipped
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.
