PPI (Reuters)
“U.S. producer prices rose slightly for the second
straight month in June as an acceleration in the cost of services was offset by
cheaper energy goods, resulting in the smallest annual increase in producer
inflation in nearly 2-1/2 years.” Story at…
TRUMP 1 – POWELL 0 (Heritage Capital)
“I am no longer in love with stocks like I was in
December and January. I turned negative on treasury bonds last week and I have
been pushing against gold for a few weeks. It’s no fun being the party pooper,
but the risk/reward is not favorable. And if the stock market breaks out
convincingly, I will play the chase game very quickly to add to my exposure.” -
PAUL SCHATZ, PRESIDENT, HERITAGE CAPITAL. Commentary at…
INFLECTION: BULL OR BEAR (Pretzel Charts)
“…this appears to be a fairly important inflection zone
for the intermediate term. Since the trend (and thus the momentum) is
presently up, bears have to treat that accordingly and await an impulsive
decline before getting too excited. As we always do, we'll track all that
in real-time and burn that bridge when we come to it. In the meantime,
hopefully this helps people visualize where we currently seem to be in relation
to the big picture. Trade safe.” Charts and discussion at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.2% to 3000.
-VIX fell about 4% to 12.39.
-The yield on the 10-year Treasury slipped to 2.124%.
When my long-term indicator turns bullish after an extended
run up, I get a little concerned. This
indicator signals when a number of signs are bullish. It is designed to signal
a bottom, but when it happens after a long run higher (we’ve gone up 6 straight
weeks) it can be warning that market participants are getting too bullish. Today
we see some evidence of that since we have a topping indicator warning that the
S&P 500 has getting too far ahead of itself.
If we see more bearish topping indicators next week, we may have to
revise our bullish stance. Even so, a
pullback, should it occur, wouldn’t have to be a large one. For now, we’ll keep
an eye out for any further negative signs. Otherwise the market continues to
look good.
My daily sum of 20 Indicators improved from +8 to +10(a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from +31 to +47. (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: -1
Most Recent Day with a value other than Zero: -1 on 12
July (The S&P 500 is too far ahead of its 200-day average w/sentiment, top-indicator.)
(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 climbed as high as $139.22 on Thursday after
Cowen initiated coverage of Microsoft with an outperform rating and a $150
price target.” Story at…
I continue to hold MSFT and XLK as trading positions
while collecting dividends.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
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
Friday, the PRICE, VIX and VOLUME indicators were
positive; the SENTIMENT, indicator was neutral. Overall the Long-Term Indicator
remained Bullish.
