“Over the past number of weeks we have tried two times to
trade out to new all-time highs. As stated, typically the first few attempts to
do so tend to fail. However, on their third attempt new highs typically are
achieved. The energy models are all “charged up” as the equity markets enter an
upcoming bullish time period. This implies the potential for a strong upside
breakout this week. With short-sellers having major stop-loss “buy orders” just
above the all-times highs, the stage is set for them to get “blown out” with a
sudden rush to new all-time highs. The question then becomes, “Is this an
upside breakout, or an upside fake-out?!” We think it will be a breakout as the
specialists’ stop-loss “order book” gets cleared out.” – Jeffrey Saut. Full commentary
at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 0.2% to 2857.
-VIX dropped about 1% to 12.4.9
-The yield on the 10-year Treasury was 2.825% as of this
post.
Currently, my daily sum of 17 Indicators improved from -2
to +4 (a positive number is bullish) while the 10-day smoothed version that
negates the daily fluctuations improved from -37 to -36.
Sentiment was a sell Friday and that often gives us some
sort of pullback, but not necessarily a big one. I won’t get updated numbers until later
tonight. However, more often than not, Sentiment alone does not indicate a top
because sentiment can remain elevated for an extended time or drop without a
correction in stock price. For that
reason, we can’t trade sentiment alone. Sentiment sets the stage, but we’d need
to see more negative signs before a correction is likely.
Bollinger Bands on the S&P 500 index are still
exhibiting a “Squeeze” (top and bottom bands are close together) suggesting a
breakout (up or down) is coming. As noted Friday, the Index is now much closer
to the upper band suggesting that the break is likely to be down. We need to see confirmation by RSI, but RSI
is still solidly neutral (63, 14-day SMA) so no need to panic yet.
Money Trend has turned up and that’s bullish. The cyclical
industrial stocks (XLI-ETF) are now out performing the S&P 500 in the short
run and that’s bullish, too. If investors were worried they would be selling
cyclicals.
My guess is that the Index will continue up for a while
longer before some more alarm bells warn of a correction. Late summer and early fall are not good times
for the stock market.
The S&P 500 is less than 1% below the January 2017 high.
The Index could make new highs, but it’s questionable how much farther it can
go. We’ll just keep an eye on the
indicators. For the time being though, it appears that investors want to buy
stocks.
I remain fully invested…at least until we see some more
signs of trouble.
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)
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
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).
I am now 50% invested in stocks. For me, fully invested
is a balanced 50% stock portfolio. As a retiree, this is a position with which
I am comfortable unless I am in full defense mode or feeling especially
optimistic.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Monday, the Price indicator was positive; Volume & VIX
indicators were neutral; Sentiment was bearish. Overall this is still a NEUTRAL
indication.
