“Most of the Federal Reserve’s 12 districts saw modest to
moderate growth from mid-October through late November, but Dallas and
Philadelphia noted slower growth, while St. Louis and Kansas City noted just
slight growth, according to the Fed’s Beige Book report released Wednesday.”
Story at…
PRODUCTIVITY (StarTribune)
“U.S. productivity grew at an annual rate of 2.3% in the
July-September quarter, slower than the previous quarter but still an
improvement over the weak annual gains of the past decade. Labor costs rose at
a modest pace in the third quarter.” Story at…
FACTORY ODERS (Reuters)
“New orders for U.S.-made goods recorded their biggest
drop in more than a year in October and business spending on equipment appeared
to be softening, suggesting a slowdown in activity in the manufacturing sector.”
Story at…
ISM SERVICES (MarketWatch)
“The Institute for Supply Management said Thursday that
its non-manufacturing index in November rose to a seasonally adjusted 60.7%,
up from 60.3% in October and the second-strongest reading in 13 years.” Story
at…
CRUDE INVENTORIES (OilPrice.com)
“As oil markets hold their breath for OPEC+’s
announcement of the final production cuts to take place starting next year, the
Energy Information Administration served a nice surprise to oil bulls by reporting an
inventory draw in crude oil of 7.3 million barrels for the week to November 30.”
Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 slipped about 0.2% to 2696.
-VIX rose about 2% to 21.19.
-The yield on the 10-year Treasury was down to 2.885% as
of 6:38pm.
I mentioned on the 29th of November that we
could still see a retest of the 2633 low. I had no idea that we would see the S&P
500 drop 5% in two days to do it. The mid-day low today was 2622! Cooler heads
prevailed and from that point the S&P 500 recovered to finish down only
0.15%. Needless to say, late-day action
was positive – the Index was up nearly 1% in the last hour alone. That was a bullish close. The blame for the
drop is unknown.
There was a huge drop in the futures overnight Tuesday; that
seems to have led to the declines. The fall in futures was blamed on the arrest
of Meng Wanzhou, a Chinese CFO of Huawei; or computer driven trades; or possibly
a hedge fund that liquidated positions. We may never know.
Even with the recovery today, we are not out of the
woods. Decliners outpaced advancers today by 5 to 1. Volume was almost 2 to 1 down-volume
to up-volume. New-lows outpaced new-highs by over 600. These are some nasty looking numbers. Still,
the trend in price was up all afternoon and closing tick (the sum of final
trades) was a bullish 592. Let’s hope that the trend continues tomorrow.
My daily sum of 17 Indicators dropped from zero to -4 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations rose from -22 to -17.
The successful test of the prior low on Black Friday
remains as a bullish sign as does the big positive swing in new-high, new-low
spread on the Wednesday before. We expect that 2633, or there about, will be
the low of this correction.
I remain cautiously bullish. (There are black swans
around in the form of news that could upset the apple cart. We’ll hope they stay
out of sight.)
MOMENTUM ANALYSIS:
(Momentum analysis is suspect in a selloff, so I‘d be
careful using momentum data for the time being – the only reason utilities are
highly ranked among ETFs is as an alternative to stocks during the correction.) The S&P 500 has been outperforming
Utilities recently and that’s bullish for other ETFs – not Utilities (XLU).
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…
THURSDAY 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 increased stock allocations to 60% invested in stocks
on 27 November. For me, fully invested is a balanced 50% stock portfolio so
this is slightly higher. I will cut back to 50% depending on indicators.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday, the VIX indicator
was negative; Price, Volume and Sentiment indicators were neutral. Overall this
is a NEUTRAL indication.
