PPI (CNBC)
“U.S. wholesale prices barely rose last month after
falling for three straight months, a sign there is little inflation pressure in
the economy. The Labor Department says the producer price index — which measures
price changes before they reach the consumer — rose 0.1 percent in February.”
Story at…
DURABLE ORDERS (Reuters)
“New orders for key U.S.-made capital goods rose by the
most in six months in January and shipments increased, pointing to solid
business spending on equipment at the start of the year.” Story at…
CONSTRUCTION SPENDING (Reuters)
“U.S. construction spending surged in January, with
investment in public projects rising to a more than eight-year high, which
could boost economic growth estimates for the first quarter. The Commerce
Department said on Wednesday that construction spending jumped 1.3 percent…”
Story at…
CRUDE INVENTORIES (PilPrice.com)
“Crude oil prices inched down today after the Energy
Information Administration reported a
crude oil inventory build of 3.6 million barrels for the week to February 8.
This compares with a build of 1.3 million
barrels for the previous week.” Story at…
ADS BUSINESS CONDITIONS INDEX (Philadelphia FED)
Red lines indicate levels of the ADS at recession starts
(recessions shown gray). Chart from the Philly FED at…
BANK OF MONTREAL (Bloomberg)
“BMO analysts Tuesday wrote that Monday’s rally “doesn’t
make a lot of sense within the context of our short-term timing model, which is
about as negative as it can possibly get.” Instead, they pointed to quadruple
expiry Friday that could be causing “outsized ripples.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.7% to 2811.
-VIX fell about 2% to 13.45.
-The yield on the 10-year Treasury rose to 2.612%
I pointed out yesterday that industrial cyclical stocks
(XLF-ETF) were underperforming vs. the S&P 500. Here’s another way of looking at the same
issue.
“What we're seeing is an increase in jobless claims being
filed in the most cyclical industries and the reason we parse out cyclical
versus more services type industries is they tend to be the first type of jobs
to go when an economy is at an inflection point—when an economy is starting to
turn. So, that is what we follow most closely. For example, if you were to look
throughout the United States right now, we're seeing jobless claims begin to
turn in states that have big manufacturing bases.” - Danielle DiMartino Booth,
a former adviser to the president of the Dallas Fed, CEO of Money Strong, LLC.
Commentary from…
My daily sum of 20 Indicators improved from +5 to +9 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from +2 to +9. This is a bullish
indication.
Today the S&P 500 is 1.5% above the 200-dMA.
Three days ago, the S&P 500 tested the 200-dMA and
bounced up. Today the Index finally broke thru the 2800 barrier after more then
3-weeks of trying. I have been ignoring
my own buy signals in the long-term indicator for too long. If we see additional
closes above the 2800 level, I’ll be increasing my %-invested in stocks to fully
invested at 50%. I am not in a rush, having already waited too long - perhaps
next week. With options expiration Friday, the markets may be a bit out of whack.
One troubling sign, the Pros have been selling based on late day action. When I
do increase stock investments, it will be necessary to watch closely to see if
this rally can keep going.
This has been just another lesson of: “Follow your
indicators!” It just seemed impossible that there would not be a retest of the
December low; it could still happen, but I am getting tired of betting that it
will.
MOMENTUM ANALYSIS:
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
*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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
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
Wednesday, the
PRICE and VIX indicators were positive. The VOLUME and SENTIMENT indicators
were neutral. Overall this is a BULLISH indication. I remain defensive for the
time being depending on market action.
