“The higher cost of groceries, gasoline and rent spurred
another increase in the cost of living in April, but an index that tracks
consumer prices grew slower than expected. The consumer price index rose 0.2%
in April…” Story at…
JOBLESS CLAIMS (MarketWatch)
"The rate of layoffs in the U.S. stuck near a 49-year low
in early May, just more proof that an ultratight labor market shows no sign of
softening. Initial jobless claims were unchanged at 211,000 in the week ended
May 5…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.9% to 2723.
-VIX dropped about 1% to 13.23.
-The yield on the 10-year Treasury slipped to 2.963%.
My daily sum of 17 Indicators slipped from +6 to +5, but
the 10-day smoothed version improved from -21 to -11. The 10-day version has been showing how much
better the market is now than it was just 2-weeks ago.
The basket of Market Internals I track remained Positive
on the markets.
The overbought-oversold ratio, sometimes called the
advance-decline ratio, was indicating “overbought” today. This indicator is
usually early so I’ll ignore it for now.
Bollinger Bands are now at an “overbought” level too, but
this indicator needs to work with RSI and RSI is not currently overbought. Further,
overbought conditions can remain for a considerable time after the end of a
correction as the market powers up.
The Index rose above the 100-day moving average (100-dMA)
today and it is nearly 2% above the 50-dMA. I think we are confirming a trend
change to the upside – let’s hope the trend remains and the market continues higher
– I think it will.
The S&P 500 has been outperforming the utilities ETF,
XLU recently and the Industrial Cyclicals ETF are outperforming the S&P 500
– both are bullish.
I wrote on 17 April that my long-term indicator was indicating
BUY based on the rapidly falling VIX and my variant of on-balance volume (OBV);
both were bullish. The VIX indicator is bullish now as the VIX has continued to
fall; the Options Boys think the market is going higher.
My plan ahead remains: If the S&P 500 drops to its
prior low of 2581 and there is an unsuccessful retest, I will probably cut
stock holdings again. If we see a successful test I’ll be adding to stocks. At
this point though, I think the correction is over. We’ll see…
MOMENTUM ANALYSIS IS STILL QUESTIONABLE. 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.
Momentum has gotten worse in the last week or so. Today, conditions were more
positive. 100% of the ETFs were up – it has been a month since we saw all the
ETF’s up on a day.
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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained 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).
18 Apr 2018 I
increased stock investments from 35% to 50% based on the Intermediate/Long-Term
Indicator that turned positive on the 17th. (It has since turned Neutral.) For
me, fully invested is a balanced 50% stock portfolio. 50% is my minimum unless
I am in full defense mode.
I added stock
positions to increase Stock investments to 55% based on more evidence that the
correction is over. I’ll sell these new positions quickly if the market turns down.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Thursday, the VIX indicator was bullish; Volume, Price and
Sentiment indicators were neutral. Overall this is a NEUTRAL indication.
