“U.S. home sales flatlined in August but inventory
increased for the first time in three years as the housing market continued to
struggle despite strength across the broader economy.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 slipped about a point to 2930.
-VIX dropped about 1% to 11.68.
-The yield on the 10-year Treasury was unchanged at 3.064%
as of this post.
The Fosback high-low Logic indicator is still issuing a warning
for the long-term while the short-term indicator is close to a sell too. I
don’t have the data to validate this indicator; I picked it up after reading
Fosback’s book, “Stock Market Logic.” Fosback said this about the one-week
version of the indicator: “A double-digit reading is rare and has nearly always
been followed by sharply declining stock prices.”
We hit a double digit reading yesterday and it remained
so today. In the 7-years that I have data on this indicator, I have only seen
one period when the indicator flashed sell.
That was off and on for an extended period from Dec 2014 until early Feb
2015. The signals were followed by a top in early March that preceded a 12%
correction. We also saw several Hindenburg Omens in the same time frame. So far, no H. Omens.
BULLISH SIGNS
-Up volume continues to pick up.
-Size of the up-moves have been larger than the down
moves over the last month.
-Late day action (the Smart Money) is still headed up.
-Breadth (measured as the % of NYSE stocks advancing over
the past 10-days) is headed up and is now 53.3% indicating that more than half
of all stocks on the NYSE have been advancing over the last 10-days.
-Breadth vs the S&P 500 index indicates that the Market
Internals are improving faster than the Index.
-Money Trend is now in positive territory and continues
up.
NEUTRAL SIGNS
-VIX is neutral.
-Bollinger Bands on the S&P 500 index are very close
to an “overbought’ reading today, but RSI is remains unchanged and solidly
neutral (62, 14-day SMA) so we have no confirmation for the Bollinger Band
signal.
BEAR SIGNS
-New-high/new-low data is headed lower and the Fosback Hi-Low
Logic index is showing an unhealthy situation where both 52-week highs and 53-week
lows are elevated.
-Statistically, the S&P 500 is too calm (measured by
daily moves) suggesting some down moves ahead. (This was a reliable indicator
for years but it has failed over the last year or so.) Sometimes bullishness
just overtakes an indicator. For the
time being, this one is dead.
Even so, as noted yesterday, most of my indicators are
improving.
Currently, my daily sum of 17 Indicators improved
slightly from +6 to +7 (a positive number is bullish; negatives are bearish)
while the 10-day smoothed version that negates the daily fluctuations improved
from -21 to -10 indicating that conditions are better than 2-weeks ago.
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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
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: Friday, the Price indicator was positive; Sentiment, Volume
& VIX were neutral. Overall this is a NEUTRAL indication.
