FOMC MINUTES (CNBC)
“The Federal Open Market Committee votes 9-1 to keep the
benchmark rate in a target range of 2.25% to 2.5%...Eight members favor one cut
this year, while the same number votes in favor of the status quo and one still
wants a rate hike. Powell says in a press conference some officials believe the
case for accommodation has “strengthened.” Story at…
FED CHAIR TESTIMONY (CNBC)
“Stocks jumped to record highs Wednesday after testimony
from Federal Reserve Chair Jerome Powell bolstered the case for easier monetary
policy in the U.S.
The S&P 500 gained
0.4% and briefly broke above 3,000 for the first time ever as the energy and
tech sectors outperformed.” Story at…
CRUDE OIL INVENTORY (OilPrice.com)
“The Energy Information Administration reported a
huge oil inventory draw of 9.5 million barrels for the week to July 5,
confirming and even exceeding the American Petroleum Institute’s estimate of
an 8.13-million-barrel draw.”
Story at…
RECESSION ODDS (Real Investment Advice)
“The New York Fed has the odds of a recession within the
next year at 33%...The New York Fed Recession Model is based on yield curve
inversions between the 10-year Treasury Note and the 3-Month Treasury Bill.”
Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.5% to 2993.
-VIX fell about 8% to13.03.
-The yield on the 10-year Treasury slipped to 2.062%.
As I have noted recently, it looks like we should be able
to make the vicinity of 3100 to 3150 for the S&P 500 before we see a
pullback and that pullback would probably be in the 3-5% range. Nothing is ever
a sure thing…we’ll see.
I don’t see anything remarkable in the indicators.
Sentiment has fallen to 87% from its recent high of 90%. That’s bullish and gives us some room to move
higher. One bearish indicator is Bollinger Bands which are close to a sell
signal. RSI is not close yet so this isn’t a bearish signal yet. I use the two
indicators together. Overall, indicators improved today.
My daily sum of 20 Indicators improved from +2 to +8 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from +7 to +20. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term.
I remain bullish.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: 0
Most Recent Day with a value other than Zero: -1 on 3
July (Bollinger Band, top-indicator was bearish.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or better is a Buy
Sign.
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…
Microsoft (MSFT) is up 10% since 5 June. Although Disney
moved to the top position today, it’s up a bit less, at 6% over the same
period. I continue to hold MSFT and XLK as conservative trading positions while
collecting dividends.
WEDNESDAY 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).
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
Wednesday, the PRICE, VIX and VOLUME indicators were
positive; the SENTIMENT, indicator was neutral. Overall the Long-Term Indicator
improved to Bullish.
