“Sales of new U.S. single-family homes fell to an
eight-month low in June and data for the prior month was revised sharply lower,
the latest indications that the housing market was slowing down… New home sales
are drawn from permits and tend to be volatile on a month-to-month basis. They
increased 2.4 percent from a year earlier.” Story at…
My cmt: So, the big decrease is actually an increase over
year ago data. This isn’t a big deal yet.
“A day after the American Petroleum Institute pushed
prices up by surprising the
market with a draw across the crude oil and fuels inventory board, the Energy
Information Administration reported a
draw in crude oil and another draw in gasoline inventories for the week to July
20. Crude oil inventories were 6.1 million barrels lower in July 16-20 than in
the week before…” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.9% to 2846.
-VIX was down about 1% to 12.29.
-The yield on the 10-year Treasury slipped to 2.970%.
Wednesday was a statistically-significant, up-day. That
just means that the price-volume move up exceeded statistical parameters that I
track. The stats show that about 60% of the time a statistically significant
move up will be followed by a down-day the next day. Since I am tracking the
Rydex long/short funds for sentiment, I see a lot of traders playing this trend
and I’d expect to see more shorts added tonight when I get the latest sentiment
(%-bulls) numbers.
The Index moved up to its upper trend line today so that
would suggest a retreat of a couple of % may be in order, especially after the
big move up today…regular readers know I have suggested a small retreat for several
days. There were, however, plenty of bull signs today.
My daily sum of 17 Indicators improved from -5 to +4
while the 10-day smoothed version that negates the daily fluctuations improved
from -18 to -14, indicating that conditions in the market are now better than
2-weeks ago.
My Money Trend indicator turned up and is now bullish. Breadth
reversed upward on a 10-day basis (short-term indicator) and that’s a good sign
too.
Some Bear issues:
-RSI remains overbought, but Bollinger Bands have not yet
confirmed this bearish sign.
-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.
We’d need to see more negative indicators flashing sell
signals before I would cut my stock allocation.
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…
WEDNESDAY 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: Wednesday, the Price and VIX indicators were positive; Volume
& Sentiment indicators were neutral. Overall this is a BULLISH indication.
