Busy day today, but here’s my report…
AUTO SALES (San Diego Union-Tribune)
“Major automakers said Tuesday that U.S. sales fell 7
percent in September and 4 percent for the June-through-September quarter,
compared with the same periods last year… Ford reported that sales of cars
plunged 25.7 percent in September, compared with a 9.9 percent drop for pickups
and a 2.7 percent dip for SUVs.” Story at…
RECESSION RISK BELOW AVERAGE (CNBC)
“The U.S. economic expansion is probably only in its
middle stages, with the chances of a recession in the next three years at a
"below average" chance, according to Goldman Sachs.” Story at…
STOCK MARKET CRAZY EXPENSIVE (Felder Report)
“It was almost a year ago I [Jesse Felder] wrote ‘What Were You
Thinking?’ referring to a quote from an interview with
Sun Microsystems CEO, Scott McNeely, that he gave a year or two after the peak
of the DotCom mania:
‘At 10 times revenues, to give you a 10-year payback, I
have to pay you 100% of revenues for 10 straight years in dividends. That
assumes I can get that by my shareholders. That assumes I have zero cost of
goods sold, which is very hard for a computer company. That assumes zero expenses,
which is really hard with 39,000 employees. That assumes I pay no taxes, which
is very hard. And that assumes you pay no taxes on your dividends, which is
kind of illegal. And that assumes with zero R&D for the next 10 years, I
can maintain the current revenue run rate. Now, having done that, would any of
you like to buy my stock at $64? Do you realize how ridiculous those basic
assumptions are? You don’t need any transparency. You don’t need any footnotes.
What were you thinking?’” See the following link for 30 stocks in the S&P
500 that are now trading at more than 10x revenues.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dipped about a point to 2923.
-VIX rose about 0.4% to 12.05.
-The yield on the 10-year Treasury dipped to 3.066% as of
5:06PM.
Currently, my daily sum of 17 Indicators remained
unchanged at -5 (a positive number is bullish; negatives are bearish) while the
10-day smoothed version that negates the daily fluctuations dipped from -6 to -11
indicating that conditions are worse than 2-weeks ago.
New 52-week lows were again much higher than new 52-week
highs. We still have a significant warning from the Fosback Hi-Low Logic
indicator and this indicator is based on the fact that new 52-week highs and
new 52-week lows should not both be high numbers at the same time. New-highs
are falling. The markets are getting stretched, but topping indicators are neutral. No need to panic yet.
I remain a very cautious Bull, 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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
Neutral 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
Tuesday, the Price
indicator was positive; Sentiment, Volume & VIX were neutral. Overall this
is a NEUTRAL indication.
