“The number of Americans losing their jobs and applying
for unemployment benefits rose modestly in mid-December after dropping sharply
to a 12-week low. The gain puts claims at the low end of their recent range
around the 220,000 line.” Story at…
PHILLY FED (MarketWatch)
“The Philadelphia Fed manufacturing index in December fell
to a seasonally adjusted reading of 9.4, from 12.9 in November to reach the
lowest level since August 2016.” Story at…
LEI (PRNewsWire)
“The Conference Board Leading Economic Index® (LEI) for
the U.S. increased 0.2 percent in November to 111.8 (2016 = 100),
following a 0.3 percent decline in October, and a 0.6 percent increase in
September.
"The LEI increased slightly in November, but its
overall pace of improvement has slowed in the last two months," said
Ataman Ozyildirim, Director of Economic Research at The Conference Board.
"Despite the recent volatility in stock prices, the strengths among the leading
indicators have been widespread. Solid GDP growth at about 2.8 percent should
continue in early 2019, but the LEI suggests the economy is likely to moderate
further in the second half of 2019."
STOCK MARKET TARGETS (RealInvestmentAdvice)
“Assuming today’s [Wednesday’s] breakdown remains intact,
2,100 (the 2015 and 2016 highs) is the next price target and support level to
watch.” Jesse Columbo.
Chart and commentary at…
My cmt: There are additional support levels at 2400 and
2450. If that doesn’t hold, the major support is the 2100 level shown above.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dropped about 1.6% to 2467.
-VIX jumped 11% to 28.38.
-The yield on the 10-year Treasury slipped to 2.810%.
Today, 1271 stocks made new 52-week lows on the NYSE. I
looked back at the records. There were
only a few times when there was a higher number over the last 10-years. Several
were in the middle of the Financial crisis.
In August 2015 there were about 1250 new-lows the day
before the correction ended. That hasn’t been the norm though. In 2010 and 2016 (16% and 14% corrections
respectively) the highest new-lows were around 1300 and in occurred 8-weeks and
3-weeks before the final correction-bottom. In both cases though, there was a
significant bounce up before the final low. That bounce started immediately
after the high new-low number.
We are either near a bottom…or not. We don’t get much
help from looking at the new-low data, but it does support that a bounce is
likely soon.
My track record in this correction has been pretty bad
though. The normal technical analysis I
use to call a bottom has failed three times...and let’s not even talk about the
failed triple bottom.
My daily sum of 17 Indicators improved from -5 to -4 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations remained unchanged at -40.
Every overbought/oversold indicator I have remains
oversold and some indicators are hinting at a turn.
This is day 63 of this correction. The Index is down 15.8% from its prior high.
The average correction over the last 10-years (excluding major crashes) lasted
52-days. The average drop over that period was 12%. The longest correction in
the last 10-years was the 19% drop in 2011. It took 108-days to complete, top
to bottom.
After the Fed debacle yesterday (a 3% swing to the
downside after the FED announcement), I said the only advice I have is to wait
for cooler heads to step in over the next day or two. They weren’t here today.
I’ll hang on longer.
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…
THURSDAY 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 increased stock allocations to 60% invested in stocks
on 27 November. I bumped up stock investments to 65% on 19 December. Both
increases were made at technical bottoms or shortly thereafter. For me, fully
invested is a balanced 50% stock portfolio so this is higher. The failure of
technical bottoms has been disappointing,
to say the least.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday, the VIX
and Volume indicators were negative; Price and Sentiment were neutral. Overall
this is a NEGATIVE / SELL indication. The concern is that the important
sell-signal was last October. The NTSM long-term system can give sell signals
near a bottom too. For the next day or two, I am ignoring this indication.
