“Orders for long-lasting U.S. factory goods declined for
the second straight month in May, as demand for cars, metal products and
aircraft fell. The Commerce Department said Wednesday durable goods orders —
items meant to last at least three years, from washing machines to tractors —
dropped 0.6 percent last month.” Story at…
PENDING HOME SALES (Reuters)
“Contracts to buy previously owned homes unexpectedly
declined for the second straight month in May, mostly due to a shortage of
properties for sale.” Story at…
CRUDE INVENTORIES (OIlPrice.com)
“A day after the American Petroleum Institute helped push
crude prices even higher by estimating a 9.228-million-barrel draw
in U.S. crude oil inventories, the EIA confirmed the
draw, at 9.9 million barrels for the week to June 22.” Story at…
MONDAY MARKET COMMENTARY (Raymond James)
“According to the astute Lowry Research organization:
Since testing its March 9th high, the S&P 500 has
continued to pull back modestly. The recent May high, around 2,730, offers the
best nearby support on continued weakness with 2,700 as further support. This
would be viewed as a buying opportunity in the context of the healthy
Supply/Demand and breadth environment.” – Jeffrey Saut. Commentary at…
My cmt: we got to 2700 today – let’s hope Raymond James
is right.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 0.9% to 2700.
-VIX rose about 13% to 17.91.
-The yield on the 10-year Treasury slipped to 2.827%.
My daily sum of 17 Indicators improved from -7 to -5,
while the 10-day smoothed version dropped from -49 to -51. The good news is
that the 10-day version slowed its decline a lot. A number below zero shows
most indicators are bearish.
My Money Trend indicator remains headed down and that’s bearish.
The Bollinger Band indicator was oversold today; RSI
(14-d,SMA) slipped to 26 that’s oversold too.
Breadth, measured as the % of stocks on the NYSE that
advanced over the last 10-days, slipped to 43.1%. Breadth vs. the S&P 500
is actually bullish. The S&P 500 is declining faster than the % of stocks
advancing and that’s a bullish sign because it limits the likely fall in the
Index and suggests a turn-around may not be too far off.
As previously noted, the spread between the Cyclical
Industrials (XLI-ETF) and the S&P 500 has narrowed over the last few
sessions and the spread continues to narrow and that’s a bullish sign. (When investors are worried they sell
cyclicals.) XLI is still underperforming the S&P 500 on every time frame I
track, but it is improving (relative to the S&P 500) and that’s bullish. If
it reverses down again I will get concerned.
The chart is now giving a warning sign. The S&P 500
dropped below the 50-dMA today and that also breaks the lower trend line. Two
closes below the trend line is a warning and may indicate a trend break. The book says it does, but with Bollinger
Bands and RSI indicating oversold it seems likely that the drop may be limited.
It is hard to say though, the Trump effect from all the tariff talk seems to be
worrying the market; news always trumps technicals (no pun intended) and markets can remain oversold for extended periods.
The Smart Money (late day action) is dropping, but not
very sharply. It’s bearish. But not by much.
My longer-term indicator system remained neutral. I
remain cautiously bullish. We’ll see – there’s no way to be too confident now
and I am waiting to see what the Index does.
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…
I still have GE in my DOW 30 chart. I’ll have to update my calculations to delete
GE and add Walgreens Boots Alliance (WBA) since it has replaced GE in the DOW
30. WBA is best known for operating Walgreens drug stores.
WEDNESDAY 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).
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. This is high for me given that we are
late in this cycle (and as a retiree), but it indicates my bullishness after
the correction. I’ll sell these new positions quickly if the market turns down.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Wednesday, the VIX, Price, Sentiment & Volume indicators
were neutral. Overall this is a NEUTRAL indication.
