“Contracts to buy previously owned homes unexpectedly
rose in June after two straight monthly declines, but the housing market
remains hobbled by a dearth of properties available for sale…The Realtors group
expects existing home sales to decrease 1.0 percent this year, reversing 2017’s
1.1 percent increase.” Story at…
DALLAS FED (Advisor Perspectives)
“The robust expansion in Texas factory activity continued
in July, according to business executives responding to the Texas Manufacturing
Outlook Survey. The production index, a key measure of state manufacturing
conditions, rose six points to 29.4, signaling an acceleration in output
growth.” Story at…
THE NATIONAL DEBT (Real Investment Advice)
“The last time the nation experienced trillion-dollar
deficits was during a serious economic downturn, no less – lawmakers took the
issue seriously. PAYGO laws were established, a fiscal commission was formed,
new discretionary spending caps were implemented and policymakers entered a
multi-year debate on how best to bring down long-term debt levels.
This time around, with the emergence of trillion-dollar
deficits during a period of economic strength – when we should be saving for future
downturns – few seem to even take notice. On our current course, debt will
overtake the size of the entire economy in about a decade, and interest will be
the largest government program in three decades or less. This will weaken both
our economy and our role in the world.” Commentary at…
JEFFREY SAUT COMMENTARY (Raymond James)
“…we are turning somewhat more cautious
on a VERY short-term trading basis…A short-term trading top is due after a
failed attempt by the SPX to trade out to new all-time highs. However, it is
just that, a short-term trading “call.” – Jeffery Saut. Commentary at…
MARKET COMMENTARY EXCERPT (Hussman Funds)
“Just as the primary driver of market returns in recent
years has been a cyclical move from depressed valuations to the most extreme
valuation multiples in history, much of the growth in the U.S. economy since
the global financial crisis has been driven by the largest cyclical increase in
history in the ratio of civilian employment to the civilian labor force. That’s
another way of saying that the growth has been largely driven by a decline in
the unemployment rate from 10% to just 3.8%. With both valuations and
unemployment at cyclical extremes, the likelihood is that the tailwinds that
have driven the market returns and economic growth of recent years will turn
into headwinds. As that happens, extrapolating growth, as if it is some sort of
entitlement, will be a profound mistake.” – John Hussman, Phd. Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dipped about 0.6% to 2803.
-VIX rose about 9% to 14.26.
-The yield on the 10-year Treasury rose to 2.974%.
If you follow the market regularly it’s always a little
disconcerting to see the markets falling. Half the trading days have finished
down over the last 10-days and there have been 8 down-days over the last month.
That’s never comforting, but indicators were mostly bullish at today’s close so
it doesn’t look like we are headed for a big drop, at least based on the data
so far.
VIX was up but it has not risen enough to give a sell
signal. RSI and Bollinger Bands are neutral. Money Trend is up. Up-volume has turned up
nicely. The Smart Money (based on late day action) is also up. Breadth has
improved on a 10-day basis.
My daily sum of 17 Indicators improved from -1 to +3
while the 10-day smoothed version that negates the daily fluctuations improved
from -18 to -11, indicating that conditions in the market are better than
2-weeks ago.
Cyclical Industrial stocks (XLI-ETF) are still
outperforming the S&P 500 over the most recent 10 and 20-day period and the
S&P 500 has been outperforming
I still don’t see a lot of bearish indicators. One is the statistical analysis of the
S&P 500 daily fluctuations. The
daily swings are very small and that can be a bearish sign, but VIX has not
dropped into the critical low are that it was back last January. A retracement
back to around 2760 or so seems like a likely bottom zone for a small retreat
and we may not get that far…but who knows? Even though I don’t expect it, selling
could always pick up. We’ll see.
I remain fully invested.
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.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
Intel took a huge hit today, dropping 8.6% due to trade
war/tariff concerns. I suspect this is overblown. Intel has a PE of 21 (vs.??
for the Dow 30) and a Dividend yield of 2.3%...seems like a value buy to me. As
shown above, it ranks 21st in the Dow 30 momentum trading system and
that’s not good.
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to POSITIVE 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: Monday, the Price indicator was positive; Volume, VIX &
Sentiment indicators were neutral. Overall this is a NEUTRAL indication.
