“The number of Americans losing their jobs fell for the
fourth week in a row in mid-June, keeping the rate of layoffs near levels last
seen in the early 1970s. Initial jobless claims declined by 3,000 to 218,000 in
the seven days ended June 16, in line with the MarketWatch forecast.” Story at…
PHILADELPHIA FED (MarketsInsider)
“A report released by the Federal Reserve Bank of
Philadelphia on Thursday showed a much bigger than expected slowdown in the
pace of growth in regional manufacturing activity in the month of June. The
Philly Fed said its index for current general activity slumped to 19.9 in June
from 34.4 in May.” Story at…
My cmt: A number above zero indicates growth.
Manufacturing in the region is still growing – just slower.
LEI – June 21 (Conference Board)
“The Conference Board Leading Economic Index® (LEI) for
the U.S. increased 0.2 percent in May to 109.5 (2016 = 100), following a 0.4
percent increase in April, and a 0.4 percent increase in March. “While May’s
increase in the U.S. LEI was slower than in recent months, the improvements in
a majority of its components offset the declines in leading indicators of labor
markets and residential construction,” said Ataman Ozyildirim, Director of
Business Cycles and Growth Research at The Conference Board. “The U.S. LEI
still points to solid growth but the current trend, which is moderating, indicates
that economic activity is not likely to accelerate.” Press release at…
GERMAN AUTO-MAKERS OFFER ZERO TARIFF (WSJ)
“Germany’s leading auto makers have thrown their support
behind the abolition of all import tariffs for cars between the European Union
and the U.S. in an effort to find a peaceful solution to the brewing trade war…That
would mean scrapping the EU’s 10% tax on auto imports from the U.S. and other
countries and the 2.5% duty on auto imports in the U.S. As a prerequisite, the
Europeans want President Donald Trump’s threat of imposing a
25% border tax on European auto imports off the table.” Story
at…
My cmt: What the #$%^? So…the Germans have had a 10% tariff
on US cars while the US has had a 2.5% tariff on German cars????? So much for fair
trade! I have never been a big Trump supporter, but I understand and support his
efforts to level the playing field with our trading partners. How are we doing
with other questionable partners like the Chinese? They impose a 25% tariff on
US cars. One wonders why the US would grant them “most favoured nation” status.
We may not need America First, but we need America fair and even. As my wife
says, “We are the big Santa Claus to the World.” Perhaps, but it shouldn’t
apply to trade.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.6% to 2750.
-VIX rose about 14% to 14.64.
-The yield on the 10-year Treasury slipped to 2.895%.
The S&P 500 dropped to a point near the lower trend
line. It was on a big day (statistically) that often indicates a turn-around
point. About 60% of the time we’d expect an up-day tomorrow. Any further significant declines will be
cause for concern. We also need to see the indicators turn upward soon.
Otherwise, further selling may be a sign of longer term weakness. On a positive
note, the Index is 1.4% above its 50-dMA and a drop to that level is always
possible.
RSI is a neutral 56; the Bollinger Band indicator is
neutral.
My daily sum of 17 Indicators declined slightly from -5
to -6, while the 10-day smoothed version dropped from +4 to -7. A number below
zero shows most indicators are bearish.
Breadth, measured as the % of stocks on the NYSE that
advanced over the last 10-days, dropped all the way down to 44.9%. (More stocks
have been going down over the last 2-weeks than have been going up.) This is
bearish and the market internals I track remain negative.
The most worrisome indicator right now is the large
spread between the Cyclical Industrials (XLI-ETF) and the S&P 500. XLI is underperforming the S&P 500 on
every time frame I track. When investors are worried they sell cyclicals.
The best news is the chart; it doesn’t look bad now as
long as the Index doesn’t drop much further.
My longer-term indicator system switched back to neutral.
I remain cautiously 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
remained 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: Thursday, the Price indicator was positive; the Sentiment, VIX
& Volume indicators were neutral. Overall this is a NEUTRAL indication.
