“…Sam Stovall (CFRA), son of legendary strategist Bob
Stovall who was the keeper of the GM indicator, wrote last week, ‘History,
encouragingly says, but doesn’t guarantee, that the S&P 500 could advance
more than 10% beyond the prior high before slipping into another decline of 5%
or more.’” – Jeffery Saut. Commentary at…
My cmt: If this bit of history holds true, the S&P
500 could make 3160 before we see a 5% pullback.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.5% to 2820.
-VIX was down about 2% to 12.41.
-The yield on the 10-year Treasury slipped to 2.949%.
My daily sum of 17 Indicators improved slightly from -6
to -5 while the 10-day smoothed version that negates the daily fluctuations
dropped from -8 to -18, indicating that conditions in the market are worse than
2-weeks ago. As noted yesterday, 2-weeks ago the S&P 500 was 2784 about a %
lower than today’s value. That seems to suggest that the market will slip some
from here.
Among the topping indicators (Bollinger Bands, RSI,
Breadth vs. S&P 500, etc.) RSI is now overbought. We’ll have to see if the Bollinger
Bands confirm this bearish sign. Some other indicators look bearish: My Money Trend
indicator is headed down and is bearish; Breadth is falling on a 10-day basis
(short-term indicator); Statistical analysis of the daily moves shows that over
the last month, market moves have been very consistent. This is sometimes a sign of complacency and
can presage a market drop. VIX has fallen to around 12 which is low, but not
the extreme complacency we saw last January when VIX fell below 10. None of
this says we are expecting a crash or major fall – a 2 or 3% dip would be more
the norm. We’d need to see more topping indicator flashing sell signals.
I am not too worried yet; 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. (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 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: Tuesday, the Price indicator turned positive; Volume, VIX &
Sentiment indicators were neutral. Overall this is a NEUTRAL indication.
