“U.S. homebuilding surged to near an 11-year high in May
amid an acceleration in both single-family and multi-family home construction,
but a second straight monthly drop in permits suggested housing market activity
would remain moderate.” Story at…
TRADE WAR – WHERE ARE WE HEADED? (Real Investment Advice)
“With the market weakness yesterday [Monday], we are
holding off adding to our equity “long positions” until we see where
the market finds support. Currently, there is a cluster of support coalescing
at the 100-dma. The 50-dma is set to cross back above the 100-dma this week,
and the downtrend line from the March highs also resides at that juncture… we
suspect the market will be sufficiently oversold enough for a reflexive bounce
by the end of the month. Again...the most
probable outcome currently remains a continued sideways and choppy market.” –
Lance Roberts. Commentary at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 0.4% to 2763.
-VIX was up about 8% to 13.35.
-The yield on the 10-year Treasury slipped to 2.899%.
The S&P 500 dipped to its lower trend line (2740ish)
this morning and bounced up from there. The day's “rally” continued for the rest of
the day. Closing Tick (sum of last trades of the day) was a mildly bullish +39
and late-day, price-action was also mildly bullish. The markets may dip to the
trendline again, or even test the 50-dMA (currently 2709), but so far there
doesn’t seem to be any signs of panic over Trade Wars or other news, so I am
cautiously bullish in the near term.
While S&P 500 closed at 3.9% above its 200-dMA, the NYSE
Composite is only 0.2% above its 200-dMA. Perhaps the Comp is suggesting selling
won’t last too much longer.
My daily sum of 17 Indicators declined from -3 to -6,
while the 10-day smoothed version dropped from +24 to +14. A number above zero
shows most indicators are bullish, but the trend has been down and overall that's a bearish sign.
Breadth, measured as the % of stocks on the NYSE that
advanced over the last 10-days, has dropped to 47.5%. (More stocks have been
going down over the last 2-weeks than have been going up.) The market internals
I track are now negative.
My longer-term indicator system dropped to neutral.
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…
TUESDAY 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: Tuesday, the Price indicator was positive; the Sentiment, VIX
& Volume indicators were neutral. Overall this is a NEUTRAL indication.
