JOBLESS CLAIMS (Reuters)
“The number of Americans filing applications for
unemployment benefits unexpectedly fell last week, pointing to strong labor
market conditions despite signs that job growth was slowing…Initial claims for
state unemployment benefits slipped 3,000 to a seasonally adjusted 223,000 for
the week ended March 2…” Story at…
PRODUCTIVITY (MarketWatch)
“The productivity of the American workforce rose solidly
again in the fourth quarter, reflecting a recent upturn that could bode well
for the U.S. economy if it’s sustained. U.S. productivity advanced at an annual
pace of 1.9% in the final three months of 2018…” Story at…
Finally, some good news!
ECB CUTS GROWTH FORECAST & ADDS STIMULUS (CNBC)
“ECB President Mario Draghi said the central bank cut its
growth estimate to 1.1 percent,
down from a 1.7 percent expansion forecast released in December. The
ECB also said its new targeted longer-term refinancing operations (TLTRO-III)
stimulus program will start in September and
run through March 2021…This is the third stimulus injection from the
ECB since 2014.” Story at…
TRADER TALK / FOOD FOR THOUGHT (CNBC)
“Stock market bubbles and panics are now largely viewed
through the lens of behavioral economics…Most important is the concept of prospect
theory, developed by Daniel Kahneman, whose seminal book, "Thinking Fast
and Slow," popularized the idea that humans fear a loss much more than
they get pleasure from a gain. That "loss aversion" went a long way
to explain the panic selling we saw at the bottom in 2009. The opposite is true
as well: Investors tend to hold on to losing stocks for far longer than is
rational to avoid the pain of the loss.” – Bob Pisani. Commentary at…
AVI GILBERT COMMENTARY EXCERPT (Gold-Eagle
“…my expectation was that we would drop back down to the
2100-2200 region after we rallied back over the 2800SPX region. And, I still
think that potential still exists today. However, there are some data points
that suggest the next decline may find support between 2500-2640SPX and set us
up for that rally over 3200SPX that I am expecting into the 2022/23 time frame
to complete this long term bull market off the 2009 lows. However, the market
is going to have to prove to me that 2500-2640 will indeed be all the decline
we get in the coming months.” – Avi Gilbert, ElliottWaveTrader.net. Commentary from…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dipped about 0.8% to 2749.
-VIX rose about 5% to 16.59.
-The yield on the 10-year Treasury dropped to 2.638%
Today the S&P 500 slipped below its 200-dMA. That had
become a support point, but it was easily broken. It’s only one day though and we need to see
back-to-back closes below the 200-dMA before we give up on the rally. The Index
has dropped 2% in just 4 days and is 6.2% from its all-time high. After 4 days
down, traders were betting long for tomorrow and we saw that in the late-day
action – it was up. There is another reason tomorrow is expected to be an up-day.
Today was a Statistically-Significant down-day. That
means that the price-volume move exceeded my statistical parameters. Stats show that an up-day occurs in the next
trading session about 60% of the time after a statistically significant down-day.
My daily sum of 20 Indicators slipped from -2 to -6 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from +44 to +30. This is a
bearish indication. See Tuesday’s blog for a run-down of key short-term signals.
One curious bear signal is the Breadth vs. S&P 500 spread. Breadth is
falling much faster than the S&P 500.
A full retest of the Christmas Eve low seems unlikely
now, but it could still happen. Given
the length of time since the December low (more than 2 months) a drop to within
a couple of percent of the prior low would be close enough to be considered a
retest of the low and that’s a decent probability.
Only a retest at or near 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…
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).
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 PRICE
indicator was positive. The VOLUME, VIX and SENTIMENT indicators were neutral.
Overall this is a NEUTRAL indication. I remain defensive, expecting some sort
of pullback.
