“The Empire State manufacturing index rebounded in
February after hitting the lowest level in a year. The index rose 4.9 points to
8.8 in February…” Story at…
INDUSTRIAL PRODUCTION (Seattle Times)
“U.S. industrial production fell 0.6 percent in January,
stemming in large part from an 8.8 percent plunge in the making of motor
vehicles and auto parts.” Story at…
MICHIGAN SENTIMENT (Bloomberg)
“U.S. consumer sentiment rebounded by more than forecast
from a two-year low, suggesting recent weak retail
sales will be a temporary blip after the
government shutdown ended and the Federal Reserve signaled it would hold off on
interest-rate hikes.” Story at…
CORRECTION UPDATE
This is day 101 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 5.3% (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.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.1% to 2776.
-VIX dropped about 8% to 14.91.
-The yield on the 10-year Treasury rose to 2.665%.
After 3 days of late-day selling, Pros were buying today (based
on late day action) and so was everyone else. The 20-dMA of late-day action has
turned down though. That hasn’t happened since mid-December. It suggests the
Pros are beginning to doubt the rally can go higher without some sort of
retracement or consolidation. Today’s closing Tick (last trades of the day) was
a decidedly bearish -365.
We keep seeing some negative signs and the price action
keeps pushing higher. It looks like the market is going to pause or retreat at
some point in the not too distant future, but I must say, we’ve seen these
clues before only to watch the Index go higher.
If we get a retreat, perhaps we’ll have a better idea whether the
S&P 500 will retest the prior low. So far, price action has remained bullish.
The S&P 500 closed above its 200-dMA for the fourth day in a row. The Index
is now 1.1% above the 200-dMA.
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. 7 out of the last 10 days
and 5 out of the last 6 days have been up; that’s a somewhat bearish sign too.
My daily sum of 17 Indicators rose from +2 to +9 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dipped from +81 to +79.
The Index broke the 200-dMA. That’s a bullish sign since
we’ve had more than 2 closes above the 200-day. I’m holding out for the other
trend-break indicator; the Index must get 3% above the trend line (in this case
the 200-dMA). I’m reluctant to jump back
in when markets are getting very over-stretched. I must begin to consider it,
however, given the relentless march upward.
A full retest seems less likely now, but it could still
happen. Only a retest at the 2351 level, or a climb back above the old highs,
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…
FRIDAY 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
Friday, the PRICE
and VIX indicators were positive. The SENTIMENT and VOLUME indicators were neutral. Overall this is a POSITIVE/BULLISH
indication. I remain defensive due to chart indications.
