“U.S. job openings rebounded in October, but hiring
continued to lag, suggesting a recent slowdown in job growth was most likely
because employers could not find qualified workers…Job openings, a measure of
labor demand, increased by 119,000 to a seasonally adjusted 7.1 million…There
were 6.1 million people unemployed in October.” Story at…
ANOTHER 50% CORRECTION IS POSSIBLE (Real Investment
Advice)
“It is unlikely that a 50-61.8% correction
would happen outside of the onset of a recession. But considering we are
already pushing the longest economic growth cycle in modern American history,
such a risk which should not be ignored. There is one important truth that is
indisputable, irrefutable, and absolutely undeniable: “mean reversions” are
the only constant in the financial markets over time. The problem is that
the next “mean reverting” event will remove most, if not all, of the
gains investors have made over the last five years. Still don’t think it can
happen?
“Stock prices have reached
what looks like a permanently high plateau. I do not feel there will be
soon if ever a 50 or 60 point break from present levels, such as they have
predicted. I expect to see the stock market a good deal higher within a
few months.” – Dr. Irving Fisher, Economist at Yale University 1929
My cmt: While it is possible, he is not calling for a 50%
drop now.
MOVE HIGHER TAKING SHAPE (MarketWatch)
“Nomura strategist Charlie McElligott on Monday called
for a “violent short squeeze” in the market,” and nothing about that session’s
whipsaw turnaround and Tuesday’s opening push higher has him changing his mind.
In fact, he’s doubling down on his bull call. We have “kindling for a massive
short-squeeze over the next month,” McElligott wrote in a follow-up note highlighted
on the Heisenberg Report blog.”
Story at…
-Tuesday the S&P 500 was down a point to 2637.
-VIX dipped about 4% to 21.76.
-The yield on the 10-year Treasury rose to 2.879% as of 5:04pm.
My daily sum of 17 Indicators improved from -2 to -1 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations rose from -2 to +3.
Not much new to say: If the correction isn’t over, today is
day 56 of the correction. If we have made a bottom (and I think we have) the
correction low was 2633 at day 45 of the correction. One could also argue the correction ended at
the retest of 2633 on day 54. The
average correction over the last 10-years (excluding crashes) has lasted
53-days top to bottom. Regardless, I have had enough. Come Wall Street, put an
end to this thing.
I remain cautiously 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…
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 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
Tuesday, 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.
