EMPIRE STATE MANUFACTURING (MarketWatch)
“The New York Fed’s Empire State business conditions
index took a sharp turn for the worse in June, falling into negative territory
for the first time in more than two years. The Empire State manufacturing index
plummeted 26.4 points to negative 8.6 in June…” Story at…
EMPIRE STATE MANUFACTURING SURVEY: SHARP DOWNTURN IN JUNE
(Advisor Perspectives)
“…Following the Great Recession, the index has slipped
into contraction multiple times, as the general trend slowed. We saw a gradual
decline in 2015 that picked up in 2016, with a decline starting in mid- to
late-2018...”
Analysis, charts and discussion at…
My cmt: As we can see, manufacturing has slowed recently
without a recession. The chart shows that the survey has posted lower numbers
in 2015, 2016 and 2017. Still, it’s a concern.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dipped about 0.2% to 2887.
-VIX rose about 0.4% to 15.35.
-The yield on the 10-year Treasury rose to 2.090%.
My daily sum of 20 Indicators dipped slightly from +5 to
+4 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from +40 to +50.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
Cyclical stocks are still underperforming the S&P 500
while Utilities are over performing relative to the S&P 500. Both are
bearish indications. We need to pay
close attention. The charts show that
the S&P 500 has stalled. I suspect
investors are on hold awaiting the Fed meeting results due Wednesday. A big moe
is possible ether way on the news.
I’m remain bullish.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10
Today’s Reading: 0
Most Recent Day with a value other than Zero: +1 on 31
May (Bollinger Bands were bullish.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or better is a Buy
Sign.
MOMENTUM ANALYSIS:
I believe the correction/pullback has ended so momentum
analysis should get more valuable. Remember, XLU (utilities) is highly rated,
but that is probably a holdover from the pullback when utilities almost always
outperform.
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…
FYI, I bought a significant position in Microsoft at the
BUY signal on 4 June as since it was one of the top momentum plays in my
system. Its PE was 27.8. Its PE was twice that a year ago, so it looks like
MSFT has room to run higher as long as it remains highly ranked in momentum.
The PE for the S&P 500 is 26.7 today so MSFT is not overpriced.
MONDAY 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).
Using the Short-term indicator in 2018 in SPY would have
made a 5% gain instead of a 6% loss for buy-and-hold. The methodology was Buy
on a POSITIVE indication and Sell on a NEGATIVE indication and stay out until
the next POSITIVE indication. The back-test included 13-buys and 13-sells, or a
trade every 2-weeks on average.
My current stock allocation is about 55% invested in
stocks as of 4 June 2019. This is based on the improved indicators 3 June and
my recommendation to increase stock holdings if we saw strong buying on 4 June.
As a retiree, I am conservatively positioned with a balanced portfolio. You may be comfortable with a higher %
invested in stocks – that’s OK.
INTERMEDIATE / LONG-TERM INDICATOR
Monday, VOLUME and PRICE indicators were positive; VIX
and SENTIMENT indicators were neutral. Overall the Long-Term Indicator
remained to BUY. A this point, this just indicates that conditions are
pretty good, but it isn’t valuable as a timing device; I issued a BUY
recommendation on 4 June, the day after the bottom.
