“China said it's rolling out new tariffs on meat, fruit
and other products from the U.S.
Those additional duties are in retaliation to President
Donald Trump's new taxes on steel and aluminum imported into the U.S. All told,
the extra tariffs will hit 128 kinds of U.S. products…” Story at…
I don’t think investors liked the news…
ISM INDEX (MarketWatch)
“American manufacturers were still going strong in March,
but many executives complained about bottlenecks getting supplies or
transporting their goods to customers, according to the latest survey by the
Institute for Supply Management
The ISM said its manufacturing index slipped to 59.3% last month from a 14-year high of
60.8% in February.” Story at…
CONSTRUCTION SPENDING (FOX News)
“Spending on U.S. construction projects ticked up a mere
0.1 percent in February from the prior month, a sign that a growing economy is
doing little to spur a more rapid pace for building homes, hospitals and
highways.” Story at…
http://www.foxnews.com/us/2018/04/02/us-construction-spending-grew-just-0-1-percent-in-february.html
RAYMOND JAMES COMMENTARY EXCERPT (Raymond James)
““Down the rabbit hole,” which is a metaphor for an entry
into the unknown, the disorienting, or the mentally deranging, from its use in
Alice's Adventures in Wonderland. Unfortunately, the same can be said about the
stock market recently. …Yesterday was Easter Sunday, as well as the
beginning of the new month, so the wakeup call was “rabbit, rabbit, rabbit” to
begin the month as the stock market hopefully emerges from its “down the rabbit
hole” decline, which was the worst quarterly performance in two years. If the
SPX can produce an upside follow-through rally to Friday’s Fling (+254 Dow
Points) and cause the SPX to close above the 2660-2670 zone, and stay there,
the trying times should be over. This morning, however, the SPMs are down 7
points on the China tariff news, the leaked Facebook memo, President Trump’s
harangues at Amazon, and the U.S.’s potential exit from NAFTA. Tesla’s recall
is also a negative.” – Jeffrey Saut. Commentary at…
Unfortunately, no follow thru today as the market fell
dramatically.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was Down about 2.2% to 2582.
-VIX was Up about 18% to 23.62.
-The yield on the 10-year Treasury slipped to 2.730%.
(Investors were buying bonds driving yields down.)
Correction Update:
Today was trading-day 44 since the prior top. The S&P
500 was 10.1% below the top and is essentially even with the prior correction
bottom. On average, corrections >10%
last 68-days…Corrections <10% have lasted 32-days.
Here’s a rundown of today’s indicators. They were mostly
down after the down day today:
-My daily sum of 17 Indicators improved from +3 to -4;
that’s a reversal of Friday’s numbers that went from -4 to +3. The 10-day
smoothed version was down to -50 from the prior -43.
-Money Trend is turning up and is now slightly up.
-Smart Money (based on late day action) was flat, although
there was some late day buying today.
-The cyclical industrials are now flat and seem to be trying
to reverse upward compared to the S&P 500.
If it continues that would be a bullish sign.
-Market Internals deteriorated from Neutral to Negative
on the Market.
With conditions improving last week it appeared that the
correction might be winding down. Needless
to say, today was weak so we’ll need some more clues to call a bottom in this
correction.
More than 90% of the volume on the NYSE was down today. That’s
the 4th extreme down-volume day in the last 2-months. 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.
I have a bottom indicator that compares the S&P 500
to Advancing stocks. That indicator is not a buy yet, but it is finally getting
more bullish.
Another clue can be volume and market internals. The most
optimistic sign is today’s low was made on volume that was only about 70% of the
volume that occurred on the 8 Feb low of 2581 on the S&P 500. That’s a sign
that selling pressure is dropping. Market Internals were somewhat improved too,
but perhaps not enough. I will look at those numbers some more later tonight. What
we really need is buyers to step in.
Overall, we are much closer to a bottom than a top.
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.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals dropped
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).
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
Model: Monday, the VIX and Volume indicators were negative; Price & Sentiment
were neutral.
