“U.S. consumer prices were unchanged in November, held
back by a sharp decline in the price of gasoline, but underlying inflation
pressures remained firm amid rising rents and healthcare costs….the CPI climbed
0.2 percent…That lifted the year-on-year increase in the so-called core CPI to
2.2 percent from 2.1 percent in October.” Story at…
CRUDE INVENTORIES (Oilprice.com)
“Crude oil prices remained steady today after the Energy
Information Administration…reported crude oil inventories in the United States
had gone down by 1.2 million barrels in the week to December 7…” Story at
RARE SELLING SUGGESTS BOTTOM (MarketWatch)
“The dots on the chart signal instances when the S&P
dropped at least 1.7% for four sessions in a row, which has happened 17 times
since 1960. As you can see, the bulk of theses drops, particularly recently,
took place near clear market bottoms, including 1974, 1982, 1987, 2002 and
2009.” Commentary and chart from…
My cmt: Hmmmm. These extremes have occurred at bottoms or
during crashes – I’ll take the bottom!
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was about 0.5% to 2651.
-VIX dipped about 1% to 21.46.
-The yield on the 10-year Treasury rose to 2.914% as of 4:44pm.
We saw another wild day with the S&P 500 making a
high around 1:30pm followed by a slide down more than 1% from the high of the
day. Fortunately, the S&P 500 had
gapped up at the open so it finished well in the black.
Today’s move was broader with more stocks moving up and
that’s a good sign. Advancers outpaced declining stocks by 2 to 1 on the NYSE
and the NYSE Composite index outpaced the S&P 500. The Russell 2000 was up
over 1%, too. Today’s action was a bit more bullish, though I would have
preferred that the Index hadn’t lost so much ground late in the day. All in all, it appears that the correction may
be fading. Still, we didn’t see a strong
signal that would have allowed an all-clear signal. Perhaps on Thursday we’ll get
that signal.
My daily sum of 17 Indicators improved from -1 to +2 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations rose from +3 to +10.
I am bullish.
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 same is true for individual stocks in the
Dow 30.
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
but 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
Wednesday, the VIX,
Volume, Price and Sentiment indicators were neutral. Overall this is a NEUTRAL
indication. Note that the VIX indicator improved to Neutral on 7 Dec. That’s a good sign for the Bulls.
