“Some analysts expect that China’s slowing growth, and
its effects on U.S. companies, will worsen in the first quarter. A recent
business-sentiment survey from Oxford Economics found that many North American
and European businesses see elevated risks of a sharp global downturn, with
many citing China’s economy and its policy response as significant risks. “The
expectation is that Q1 is going to be brutal,” said Brad Setser, former deputy
assistant Treasury secretary for international economic analysis in the Obama
administration, and now a senior fellow in international economics at the
Council on Foreign Relations.” Story at…
SMALL BUSINESS OPTIMISM (FoxBusiness)
“…small business owners' expectations about the future
are shaky," said NFIB Chief Executive Juanita Duggan in prepared remarks.
"One thing small businesses make clear to us is their dislike for
uncertainty, and while they are continuing to create jobs and increase
compensation at a frenetic pace, the political climate is affecting how they
view the future." Story at…
JOLTS (Bloomberg)
“U.S. job openings rebounded, reaching a record in
December as the rate of those leaving jobs held steady, underscoring robust
demand for workers. The number of positions waiting to be filled rose by
169,000…” Story at…
TECHNICALLY SPEAKING EXCERPT (Real Investment Advice)
“What will be critically important now is for the markets to
retest and hold support at the Oct-Nov lows which will coincide with the
50-dma. A failure of that level will likely see a retest of the 2018
lows.” A retest of those lows, by the way, is not an “outside
chance.” It is actually a fairly high possibility. A look back at
the 2015-2016 correction makes the case for that fairly clearly.” Commentary
at…
IS THE S&P 500 MAXED OUT?
Chart from RIA, but I added the upper trend line and the
note regarding its impact on the Index. Original chart at…
CORRECTION UPDATE
This is day 98 of this correction (assuming we haven’t
made a bottom yet – I count top to bottom).
As of today’s close, the Index is down 6.3% (19.8% max) from its prior all-time
high and has included 21 new-lows. In recent years only the 2011 correction
contained 21 new-lows. That correction bottomed at 19.4% on day 69 and
successfully retested the low about 2% lower on day 108.
The S&P 500 Index is now
even with 200-dMA.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 1.3% to 2745.
-VIX slipped about 3% to 15.43
-The yield on the 10-year Treasury rose to 2.680%.
The S&P 500 finished 0.05% above the 200-dMA. Let’s just call it even with the 200-day.
Today was a statistically-significant up-day and that just means that the move
up exceeded my statistical measures. The
data shows that about 60% of the time this sort of up-move will be followed by
a down-day. Statistically-significant
days also occur at tops. Along with
other data, it can help identify a top, but by itself, it doesn’t. This time, we have the 200-dMA providing
significant resistance; we also note that the Index is at its upper trend-line (the
non-accelerated one) in the chart above under “Is the S&P 500 Maxed Out?” I
don’t think the Index is going to get too much higher in the short run. If it
were to rise at the non-accelerated rate (as it did for 7 years after the 2009
low) it would take 2 years to get back to the prior highs. I don’t consider the accelerated rate to be
sustainable given that earnings are falling. An accelerated rate would push the
Index back above its trend line and raise the risk of further significant
correction.
My daily sum of 17 Indicators improved from +8 to +9 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations rose from +93 to +94.
The key still looks like the 200-dMA. Can the S&P 500
power thru its 200-day as it has thru the other levels of resistance? I think
we’ll get above the 200-day, but perhaps fail to hold it. We should see at
least a 5% dip. Whether we’ll have a full retest remains to be seen. To me it
still seems more likely than not.
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:
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
improved to POSITIVE 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
Tuesday, the VIX and
VOLUME indicators were positive. The Sentiment and Price indicators were
neutral. Overall this is a POSITIVE (Bullish) indication. I remain defensive
due to chart indications.
