“U.S. consumer spending posted its biggest gain in five
months in April, a further sign that economic growth was regaining momentum
early in the second quarter, while inflation continued to rise steadily…The
personal consumption expenditures (PCE) price index excluding the volatile food
and energy components increased 0.2 percent for the third straight month.”
Story at…
JOBLESS CLAIMS (MarketWatch)
“U.S. jobless claims fell at the end of May, suggesting
that a recent increase in the rate of layoffs stemmed mostly from seasonal
quirks whose effects are already fading. Initial jobless claims declined by
13,000 to 221,000 in the week ended May 26.” Story at…
CHICAGO PMI (MarketWatch)
“The MNI Chicago business barometer surged 5.1 points to
a reading of 62.7, the highest level since January.” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dropped about 0.7% to 2705.
-VIX rose about 3% to 15.43.
-The yield on the 10-year Treasury rose to 2.875%
Technically, today we saw profit taking after the big
move Wednesday, but there are others who will say today’s decline was all about
the Trump Tariffs which were announced today. I don’t know, it doesn’t really
matter – we’re watching the market’s moves and different measures of market
internals to gauge the trend. The Tariffs won’t help the stock market, even if
the actual effects will take a lot of time to slow the economy; but I am not too
worried, yet.
As I said yesterday, there’s a lot of potential news that
could shake up the markets; today we got some.
All we can do is follow the market and react if more bad news does show
up.
My daily sum of 17 Indicators slipped from +5 to 0, while
the 10-day smoothed version dropped from +22 to +15. Today we undid all the
good signs from yesterday. It’s not all
that bad though as the indicators as a whole are now neutral.
My longer-term indicator system remains bullish.
MOMENTUM ANALYSIS:
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 had 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 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).
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.
On 10 May 2018 I
added stock positions to increase Stock investments to 58% 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 Price and VIX Indicators were positive; Volume and
Sentiment indicators were neutral. Overall this is a BULLISH indication.
