“Our short-term model registered a “soft” cautionary
signal after Tuesday’s closing bell. The McClellan Summation Index is below
zero for the first time in six months and has also turned negative with stocks
near their all-time highs. Meanwhile, the NASDAQ 100 closed below its 50-DMA
for the first time since May (chart 2, page 3). That is likely driven by the
FANG stocks on the revelation that China has implanted tiny “spy chips” in many
of the FANG stocks’ servers (chart 3, page 3). Support levels for the SPX are
the 50-DMA at 2876 and the 100-DMA at 2817. We do not expect this zone to be
violated. However, even a pullback to 2817 would not “dent” this secular bull
market. This week there is a fairly strong negative energy blast due, but it
should subside by week’s end.” – Jeffrey Saut. Full market commentary at…
Of course there is always another side to market
opinions. The following is an excerpt
from Hussman funds. Unfortunately, John
Hussman has been very early in his bear calls and they have not worked so far.
Here is another Bear analysis by John Hussman, Phd.
MARKET COMMENTARY EXCERPT (Hussman Funds)
“Presently, the dispersion we observe in market internals
suggests that investors are becoming increasingly selective; that their psychology
has subtly shifted away from speculation, and toward risk-aversion. Our own
measures shifted negative on February 2, 2018. More recently, the 2% advance of
the S&P 500 Index beyond its late-January high has been accompanied by a
sharp narrowing of participation and leadership across individual securities.
The profound narrowing we observe in daily data, coupled with repeated
leadership reversals within a fraction of a percent of the recent market highs,
is what amplifies the likelihood that recent valuation extremes will have
immediate and severe consequences, as they did after the 2000 and 2007 peaks…
present conditions already encourage a highly defensive, even hard-negative
investment outlook.” – John Hussman, PhD.
My cmt: We have observed the dispersion in the market
too, as evidenced by several warnings by the Fosback Hi-Low Logic indicator.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dropped about a point to 2884
(with some round off error accounting for the difference).
-VIX rose about 6% to 15.69.
-The yield on the 10-year Treasury was 3.23% Friday. Bond
markets were not open today.
Up volume was twice down volume today. That’s a bullish number, but it is tempered
by the fact that only 50% of stocks on the NYSE were up today. We’d like to see more breadth – spread the
money around with more stocks advancing – rather than concentrated in only half
the stocks. Still, it’s a start that may signal that this downturn (small so
far) is closer to an end than the start.
Today’s overall volume was about 3% below the monthly
average; so far, we see no signs of panic and selling is not accelerating.
Bollinger Bands (2 std deviations above and below the
Index) are still showing a squeeze (upper and lower Bollinger Bands are close
together). This indicates we may see a breakout soon, up or down. I think the
most likely direction is up, given that RSI is in neutral territory and the
Index is at the lower band.
Only 7 of the last 10-days have been up and that suggests
we’re closer to a bottom than a top.
The overbought/oversold ratio has cleared its “oversold” indication
and is now neutral.
Currently, my daily sum of 17 Indicators improved from -5
to -3 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations dropped from -35 to -41
indicating that conditions are worse than 2-weeks ago.
New 52-week lows were again much higher than new 52-week
highs with the spread of new-highs minus new-lows was -297. That’s a number
where we often see bottoms. Perhaps more telling, it was an improvement over
the last 2-days giving us a small hint that selling may be slowing.
Cyclical Industrial stocks (XLI-ETF) are still
outperforming the S&P 500, but Utilities (XLU-ETF) are slightly
outperforming the S&P 500 recently. Given that the XLU is barely ahead of
the Index I’d say this is a bullish sign.
The Fosback Hi-Low Logic indicator is no longer giving a
bearish signal.
The Bear argument says that rising Bond Yields will give
us a big stock sell-off. So far, my technical indicators have not confirmed the
Bear scenario.
I said that we’ll probably drop below 2875 before this
pullback ends and today the Index hit 2862 on an intraday basis. A close around
2875 is not out of the question, but my guess is that we won’t fall too much
farther than the 2875 region.
I remain a 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…
MONDAY 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).
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
Monday, the Price
indicator was positive; Sentiment, Volume & VIX indicators were neutral.
Overall this is a NEUTRAL indication.
