“The number of Americans filing applications for
unemployment benefits fell to more than a 49-year low last week, but the drop
likely overstates the health of the labor market as claims for several states
including California were estimated…Initial claims for state unemployment
benefits dropped 13,000 to a seasonally adjusted 199,000 for the week ended
Jan. 19…” Story at…
LEI (Conference Board)
"The U.S. LEI declined slightly in December and the
recent moderation in the LEI suggests that the U.S. economic growth rate may
slow down this year," said Ataman Ozyildirim, Director of Economic
Research at The Conference Board. "While the effects of the government shutdown
are not yet reflected here, the LEI suggests that the economy could decelerate
towards 2 percent growth by the end of 2019." Press release at…
CRUDE OIL INVENTORIES (OilPrice.com)
“U.S. crude oil inventories went up by 8 million barrels
in the week to January 18, the Energy Information Administration said in its latest
weekly petroleum status report. At 445 million barrels, these were about 9
percent above seasonal limits…Oil prices began to settle this week,
despite persistent worry about the global economy, after reports emerged that
Asian government were considering fiscal stimulus measure in anticipation of
the slowdown.” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.2% to 2639.
-VIX dropped about 3% to 18.89.
-The yield on the 10-year Treasury dipped to 2.714%.
We said that Friday was probably a Top. Based on the
evidence so far, we haven’t seen anything to change that view. Internals
improved today, but there were still plenty of negatives.
The overbought/oversold ratio is still overbought. Today, RSI flipped to overbought, too. Bollinger bands are not overbought, but Bollinger
bands were very close to overbought last week. I like to watch RSI and the
Bollinger Bands together.
My Money Trend indicator is still headed down and that’s
a bearish sign. (This indicator attempts to follow the general concept of Lowry
Research and their supply and demand methodology for stock market analysis.
Their concept is based on a detailed stock-by-stock analysis while mine is an
estimate based on readily available Macro data.
Theirs is much more accurate, but that doesn’t mean mine isn’t useful.)
My daily sum of 17 Indicators improved from +1 to +4 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations declined from +70 to +64. I tend to
watch the 10-day direction of this indicator and for now it is headed down, a
bearish sign. Since the daily value was up today, I’ll be watching tomorrow to
see where this indicator is headed.
Repeating what I’ve been saying for a while:
A “V”-bottom is very unusual and I don’t think it is
likely that this correction will race to a top without a retest of the prior
low at 2351. I sold the rally and cut my stock holdings back to about 30%, 9
January to reduce risk. Only a retest at the 2351 level, or a climb back above
the old highs (not likely without a retest), will tell us whether 2351 was THE
bottom.
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
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).
My current stock allocation is about 30% invested in
stocks on as of 9 January 2019. For me, fully invested is a balanced 50% stock
portfolio so this is a very conservative position.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday, the Sentiment
and Price indicators were positive; The Volume and VIX indicators were neutral.
Overall this is a NEUTRAL indication. The longer/intermediate-term version of Sentiment
is neutral.
