“U.S. job growth accelerated in May and the unemployment
rate dropped to an 18-year low of 3.8 percent, pointing to rapidly tightening
labor market conditions, which could stir concerns about inflation…Nonfarm
payrolls surged by 223,000 jobs last month…” Story at…
My cmt: A friend once told me that he was taught in his
MBA program that 4% was the lowest unemployment could go. If memory serves me,
and it doesn’t always, the last time the unemployment rate dropped below 4% was
before the dot.com crisis. This isn’t a prediction of an impending market
collapse, but it does show that the economy is getting overheated. This expansion is
likely to end the same way it did in 2000.
The FED will kill it.
AVG HOURLY EARNINGS (Bloomberg)
“Average hourly earnings increased 2.7 percent from a year earlier…” Story at…
AVG HOURLY EARNINGS (Bloomberg)
“Average hourly earnings increased 2.7 percent from a year earlier…” Story at…
ISM INDEX (CNBC)
“The ISM manufacturing index jumped to 58.7 in May from
57.3 in April.” Story at…
AUTO SALES (USA Today)
“U.S. new-vehicle sales appear to have risen in May
as the auto industry gets a better-than-expected start to the year, based on
reports from automakers Friday. Edmunds.com analysts projected a May sales increase of
3.5% compared with a year earlier.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 1.1% to 2734.
-VIX dropped about 13% to 13.46.
-The yield on the 10-year Treasury rose to 2.898%
Friday, we saw a positive day with strong late-day
buying. Closing Tick (sum of last days of the year) was +783. That’s a huge
number. The last time we saw that kind of closing bullishness was at the 2
April re-test of the 10.1% correction bottom. Investors were right then and I
think they are right now. This level of tick is a bullish sign.
My daily sum of 17 Indicators improved from +0 to +4,
while the 10-day smoothed version dropped from +15 to +11. I am not worried about
the drop. Today, we saw another reversal – this time to the upside as internals
and the market both improved.
Some signs: Up-volume is improved; Money Trend is headed
up; Smart Money (late-day action) is neutral; Breadth (10-dMA of stocks
advancing on the NYSE) was 54%, so most stocks have been rising over the last
10-days; New-high/new-low data is mixed, but leaning toward the bullish side;
VIX is still falling nicely; the XLI-SPY spread is bullish.
My longer-term indicator system remains bullish and I
remain a bull.
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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
but remained 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. This is high for me (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: Friday, the Price and VIX Indicators remained positive; Volume
and Sentiment indicators were neutral. Overall this is a BULLISH indication.
