Chicago PMI … PCE Price Index … Personal Spending … Univ of Michigan Sentiment … Stock Market Analysis… ETF Trading … Dow 30 Ranking

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

 

CHICAGO PMI (Advisor Perspectives)

The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, rose to 50.4 in August from 44.4 in July…” Story at…

https://www.advisorperspectives.com/dshort/updates/2019/08/30/chicago-pmi-up-in-august

My cmt: The Chicago PMI is back into expansion, but barely.

 

PERSONAL SPENDING / PCE PRICE INDEX (MarketWatch)

 "Americans boosted spending in July on recreational goods and vehicles as well as energy to run their air conditioners, but inflation remained low enough to give the Federal Reserve room to cut interest rates next month. Consumer spending jumped 0.6% last month…Inflation as measured by the Fed’s preferred PCE price index rose 0.2% in July, nudging the yearly rate up to 1.4% from 1.3%.” Story at…

https://www.marketwatch.com/story/us-consumer-spending-surges-in-july-but-inflation-still-quite-tame-2019-08-30?mod=economy-politics

 

MICHIGAN SENTIMENT (CNBC)

“The University of Michigan’s final print on its consumer sentiment index came in at 89.8 for August…The index was at 98.4 in July, making this the largest monthly decline since December 2012.” Story at…

https://www.cnbc.com/2019/08/30/us-consumer-sentiment-august-2019-final.html

My cmt: Consumer sentiment tends to follow the stock market. As the market goes higher we’ll see sentiment improve.

 

HERITAGE CAPITAL COMMENTARY EXCERPT (Heritage Capital)

“While the past few days did nothing to clear up the four-week trading range, I still give the nod to the bulls as I have been saying for weeks…I believe we will see the bulls resolve the market to all-time highs and Dow 28,000 by year-end. For now, we want to see where leadership unfolds.” Commentary at…

http://investfortomorrowblog.com/archives/4385

 

TOP FOR STOCKS MONTHS AWAY (McClellan Publications)

https://www.mcoscillator.com/

 

MARKET REPORT / ANALYSIS         

-Friday the S&P 500 rose about 0.1% to 2926.

-VIX rose about 6% to 18.98.

-The yield on the 10-year Treasury rose to 1.500%.

 

My daily sum of 20 Indicators improved from +2 to +4 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations improved from -6 to +3. (These numbers sometimes change after I post the blog based on data that comes in late.)

 

-MACD of S&P 500 price is bullish.

-Money Trend is bullish.

-New-high/new-low data is trending bullish.

-Money Trend is bullish.

-High-volume days gave us a buy signal Thursday and that’s a “correction over” call.

 

-MACD of Breadth is bearish.  This indicator has been good recently – longer term, its record is not all that great.

 

TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a neutral reading.)

Today’s Reading: -1      

-The Long-term Fosback Logic Index indicator was bearish, but this indicator isn’t valid now because the McClellan Oscillator is positive.

- Most Recent Day with a value other than Zero: -1 on 30 August.

(1) +10 Max Bullish / -10 Max Bearish)

(2) -4 or below is a Sell sign. +4 or better is a Buy Sign.

 

MOMENTUM ANALYSIS:

Just a reminder…During corrections, momentum is generally not giving a very accurate picture, or at least it is giving a correction picture – it will change significantly when the correction ends. During the correction, Utilities will generally outperform as will similar Dow stocks, like Verizon. Momentum here is a short-term call.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

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…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

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 20 August 2019. This is a conservative balanced position appropriate for a retiree.

 

INTERMEDIATE / LONG-TERM INDICATOR

Friday, the VIX indicator was negative; VOLUME, SENTIMENT and PRICE Indicators were neutral. Overall, the Long-Term Indicator improved to HOLD.

GDP- 2nd Estimate … Jobless Claims … This Time is Not Different … Stock Market Analysis… ETF Trading … Dow 30 Ranking

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

 

GDP (MarketWatch)

“The U.S. economy grew a touch slower in the spring than initially reported owing to declining exports and weak corporate investment, but companies still posted the biggest increase in profits in five years even as their business outlook dimmed. Gross domestic product, the official scorecard for the economy, expanded at a 2% annual pace from April through June…” Story at…

https://www.marketwatch.com/story/second-quarter-gdp-trimmed-to-2-from-21-companies-cut-spending-boost-profits-2019-08-29

 

JOBLESS CLAIMS (Bloomberg)

“Filings for U.S. unemployment benefits dropped to a four-week low, offering the latest sign of labor-market strength. Jobless claims decreased by 12,000 to 209,000 in the week ended Aug. 17…” Story at…

https://www.bloomberg.com/news/articles/2019-08-22/u-s-jobless-claims-hit-four-week-low-underscoring-strength

 

THIS TIME IS NOT DIFFERENT (CNBC)

"Global interest rates are negative because the world economy is heading toward a synchronized recession.” – Ron Insana. Story at…

https://www.cnbc.com/2019/08/28/ron-insana-it-aint-different-this-time-for-the-inverted-yield-curve.html

 

MARKET REPORT / ANALYSIS         

-Thursday the S&P 500 rose about 1.3% to 2925.

-VIX dropped about 8% to 17.88.

-The yield on the 10-year Treasury rose to 1.497%.

 

Since the top on 26 July we’ve had two 90% down (volume) days. Multiple 90% down-days are very bearish, until and unless, one sees a reversal 90% up-volume-day, or rarely, back-to-back 80% up-volume days.  We had a reversal indication on 16 and 19 August with two 80% up volume days; and today we had a second day in a row with 80% up-volume indicating another reversal. That’s very bullish and is a “correction over” signal.  That’s about all we need to know today, so I won’t go into a lot of other extraneous details.

 

-My daily sum of 20 Indicators improved from zero to +2 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations improved from -21 to -6. (These numbers sometimes change after I post the blog based on data that comes in late.)

 

TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a neutral reading.)

Today’s Reading: -1      

-The Long-term Fosback Logic Index indicator was bearish, but this indicators isn’t valid now because the McClellan Oscillator is positive.

- Most Recent Day with a value other than Zero: -1 on 29 August.

(1) +10 Max Bullish / -10 Max Bearish)

(2) -4 or below is a Sell sign. +4 or better is a Buy Sign.

 

MOMENTUM ANALYSIS:

Just a reminder…During corrections, momentum is generally not giving a very accurate picture, or at least it is giving a correction picture – it will change significantly when the correction ends. During the correction, Utilities will generally outperform as will similar Dow stocks, like Verizon. Momentum here is a short-term call.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

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…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

THURSDAY 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 20 August 2019. This is a conservative balanced position appropriate for a retiree.

 

INTERMEDIATE / LONG-TERM INDICATOR

Thursday, the VIX indicator was negative; VOLUME, SENTIMENT and PRICE Indicators were neutral. Overall, the Long-Term Indicator improved to HOLD. As previously noted, since we are already close to re-testing the correction low, I see no point in exiting the market until we see a break below the prior low (2841) with deteriorating signs. I’ll remain fully invested for the time being.

Crude Inventories … Inverted Yield Spread … Stock Market Analysis… ETF Trading … Dow 30 Ranking

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

 

CRUDE INVENTORIES (OilPrice.com)

“Crude oil prices continued higher today after the Energy Information Administration reported a 10-million-barrel draw in crude oil inventories. The report followed the American Petroleum Institute’s estimate of an 11.1-million-barrel draw in inventories, released yesterday.” Story at…

https://oilprice.com/Energy/Crude-Oil/Huge-Crude-Oil-Draw-Sends-Oil-Prices-Higher.html

 

INVERTED YIELD SPREAD AGAIN (Advisor Perspectives)

“The lead time for recessions is quite a range - after going negative, recessions have begun anywhere from 16 to 62 weeks later.” Details at…

https://www.advisorperspectives.com/dshort/updates/2019/08/27/treasury-snapshot-inverted-yield-curve

 

TECHNICALLY SPEAKING EXCERPT (Real Investment Advice)

“The reason we suggest selling any rally is because, until the pattern changes, the market is exhibiting all traits of a ‘topping process.’ As the saying goes, a market-top is not an event; it’s a process.” – Lance Roberts. Commentary at…

https://realinvestmentadvice.com/technically-speaking-market-risk-is-rising-as-retail-sends-warning/

 

MARKET REPORT / ANALYSIS         

-Wednesday the S&P 500 rose about 0.7% to 2888.

-VIX dropped about 5% to 19.35.

-The yield on the 10-year Treasury rose to 1.481%.

 

A number of indicators reversed to the bullish side today…

-My daily sum of 20 Indicators dropped from -13 to zero (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations improved from -36 to -21. (These numbers sometimes change after I post the blog based on data that comes in late.) The big turnaround is a reminder to pay attention to the 10-day version.

 

Today was a very strong day in several categories. 82% of the volume was up-volume on the NYSE.  Another up-volume day like today would once again be a “correction-over” signal. 71% of stocks on the NYSE were up today. That’s a good number too. The new-high/new-low spread (difference between the two) improved today and that hadn’t happened in the prior 3 sessions. Still, it would be nice to see more new-highs especially since new-lows are still outpacing new-highs.

 

The McClellan oscillator flipped above zero today and that cancels the Fosback bearish Logic Indicator.  

 

My opinion hasn’t changed; the index would need to close below 2841 with deteriorating internals before I get too worried. For the time being though, I remain cautiously optimistic.

 

TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a neutral reading.)

Today’s Reading: -2      

-The Long-term Fosback Logic Index short and long-term indicators were bearish, but these indicators aren’t valid now because the McClellan Oscillator is positive. .

- Most Recent Day with a value other than Zero: -2 on 28 August.

(1) +10 Max Bullish / -10 Max Bearish)

(2) -4 or below is a Sell sign. +4 or better is a Buy Sign.

 

MOMENTUM ANALYSIS:

Just a reminder…During corrections, momentum is generally not giving a very accurate picture, or at least it is giving a correction picture – it will change significantly when the correction ends. During the correction, Utilities will generally outperform as will similar Dow stocks, like Verizon. Momentum here is a short-term call.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

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…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

WEDNESDAY MARKET INTERNALS (NYSE DATA)

Market Internals reversed from NEGATIVE 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 20 August 2019. This is a conservative balanced position appropriate for a retiree.

 

INTERMEDIATE / LONG-TERM INDICATOR

Wednesday, the VIX indicator was negative; VOLUME, SENTIMENT and PRICE Indicators were neutral. Overall, the Long-Term Indicator improved to HOLD. As previously noted, since we are already close to re-testing the correction low, I see no point in exiting the market until we see a break below the prior low (2841) with deteriorating signs. I’ll remain fully invested for the time being.

Consumer Confidence … Stock Market Analysis… ETF Trading … Dow 30 Ranking

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

 

CONSUMER CONFIDENCE (Conference Board)

The Conference Board Consumer Confidence Index® declined marginally in August, following July’s rebound. The Index now stands at 135.1 (1985=100), down from 135.8 in July… “Consumer confidence was relatively unchanged in August, following July’s increase,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved further, and the Present Situation Index is now at its highest level in nearly 19 years (Nov. 2000, 179.7). Expectations cooled moderately, but overall remain strong. While other parts of the economy may show some weakening, consumers have remained confident and willing to spend. However, if the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers’ optimism regarding the short-term economic outlook.” Press release at…

https://www.conference-board.org/data/consumerconfidence.cfm

 

MARKET REPORT / ANALYSIS         

-Tuesday the S&P 500 rose about 1.1% to 2878.

-VIX rose about 5% to 20.31.

-The yield on the 10-year Treasury slipped to 1.472%.

 

We have a lot of bearish signs:

-We can’t like the new-high/new-low data. Today, 130 issues made new-highs on the NYSE while 209 Issues made new-lows. When one examines new-high/new-low data, they should not both be high. These are bad numbers and the Fosback High/low logic long-term indicator is issuing a “big drop” warning and the short-term number is negative, too. We remember that this indicator was the only one to call the top (to the day) before the 20% correction last year.

-MACD of Breadth is bearish.  If the signal line drops below zero that is an outright sell.

-MACD of S&P 500 price is bearish.

-XLU is outperforming the S&P 500.

-XLI is underperforming the S&P 500.

-My daily sum of 20 Indicators dropped from -8 to -13 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations dropped from -33 to -36. (These numbers sometimes change after I post the blog based on data that comes in late.) Most of these indicators are short-term. -13 is a very bearish number.

 

We must be concerned. Remember the CASS Information Systems comment:

“When the December 2018 Cass Shipments Index was negative for the first time in 24 months, we dismissed the decline as reflective of a tough comparison. In January and February 2019, we again made rationalizations. When March was also negative (-1.0%), we warned that we were preparing to “change tack” in our outlook; when April was down (-3.2%), we said, “we see material and growing downside risk to the economic outlook.” With the -5.9% drop in July, following the -5.3% drop in June, and the -6.0% drop in May, we repeat our message from last two months: the shipments index has gone from “warning of a potential slowdown” to “signaling an economic contraction.” Report at…

https://www.cassinfo.com/hubfs/Freight%20Payment%20/Transportation%20Indexes/Cass%20Freight%20Index/Reports/Cass%20Freight%20Index%20Report%20-%20July%202019.pdf?hsCtaTracking=5fde9be4-1dd0-462f-8c5f-b100aca52fc1%7C0990f099-885d-442a-972a-aeb259c5a188

 

Still, there are bright spots in the stock market.  One of the simplest things I follow (and it’s not one of my indicators) is how many of the DOW stocks were up over the last 10-days. At the 12 August bottom, only 33% of the Dow stocks had closed in positive territory over the previous 10-days.  Now after 3 weeks of up and down movement, we are about 1% higher on the S&P 500, but (as of Tuesday, today) 52% of the Dow stocks had positive closes over the last 10-days. That’s a big improvement. We need to hope it will continue.

 

The chart, too, shows a triple bottom in the general region of 2841. The chart looks bullish to me even though my indicators aren’t.

 

The index would need to close below 2841 with deteriorating internals before I get too worried. For the time being though, I remain cautiously optimistic.

 

TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a neutral reading.)

Today’s Reading: -2      

-The Long-term Fosback Logic Index short and long-term indicators were bearish.

- Most Recent Day with a value other than Zero: -2 on 27 August.

(1) +10 Max Bullish / -10 Max Bearish)

(2) -4 or below is a Sell sign. +4 or better is a Buy Sign.

 

MOMENTUM ANALYSIS:

Just a reminder…During corrections, momentum is generally not giving a very accurate picture, or at least it is giving a correction picture – it will change significantly when the correction ends. During the correction, Utilities will generally outperform as will similar Dow stocks, like Verizon. Momentum here is a short-term call.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

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…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

TUESDAY MARKET INTERNALS (NYSE DATA)

Market Internals dropped to 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).

 

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 20 August 2019. This is a conservative balanced position appropriate for a retiree.

 

INTERMEDIATE / LONG-TERM INDICATOR

Tuesday, the VIX and VOLUME indicators were negative; SENTIMENT and PRICE Indicators were neutral. Overall, the Long-Term Indicator switched to SELL. As previously noted, since we are already close to re-testing the correction low, I see no point in exiting the market until we see a break below the prior low (2841) with deteriorating signs. I’ll remain fully invested for the time being.

Durable Orders … Stock Market Analysis… ETF Trading … Dow 30 Ranking

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

 

DURABLE ORDERS (MarketWatch)

“Orders for durable goods rose 2.1% in July, the Commerce Department said Monday. It is the second straight monthly gain… Shipments of non-defense capital goods fell 0.7% in July, largest drop since Oct. 2016.” Story at…

https://www.marketwatch.com/story/durable-goods-orders-jump-in-july-boosted-by-boeing-orders-2019-08-26

 

MARKET REPORT / ANALYSIS         

-Monday the S&P 500 rose about 1.1% to 2878.

-VIX dipped about 3% to 19.32.

-The yield on the 10-year Treasury slipped to 1.526%.

 

As we noted over the weekend, Friday’s low tested the prior correction low of 2841. While the test didn’t meet my buy signals, that isn’t very important. We already had a buy-signal on the back-to-back, high up-volume days on 16 and 19 August. There is no requirement for us to have another test of the low, although a retest might give us more information.  The news has “trumped” the technicals, so for the time being we’ll watch market action and hope we see continued improvement. The chart shows a triple bottom in the general region of 2841. The chart looks bullish to me even though my indicators aren’t.

 

My daily sum of 20 Indicators dropped from -7 to -8 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations improved from -34 to -33. (These numbers sometimes change after I post the blog based on data that comes in late.) Most of these indicators are short-term.

 

The index would need to close below 2841 with deteriorating internals before I get too worried. I remain somewhat worried since the Fosback High/low logic indicator is back in play and is issuing a “big drop” warning. For the time being though, I remain optimistic.

 

TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a neutral reading.)

Today’s Reading: -1      

-The Long-term Fosback Logic Index indicators was bearish. This is a concern since the McClellan Oscillator has turned negative.

- Most Recent Day with a value other than Zero: -1 on 26 August.

(1) +10 Max Bullish / -10 Max Bearish)

(2) -4 or below is a Sell sign. +4 or better is a Buy Sign.

 

MOMENTUM ANALYSIS:

Just a reminder…During corrections, momentum is generally not giving a very accurate picture – it will reverse when the correction ends. During the correction, Utilities will generally outperform as will similar Dow stocks, like Verizon. Momentum here is a short-term call.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

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…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

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 20 August 2019. This is a conservative balanced position appropriate for a retiree.

 

INTERMEDIATE / LONG-TERM INDICATOR

Monday, the VIX indicator was negative; VOLUME, SENTIMENT and PRICE Indicators were neutral. Overall, the Long-Term Indicator switched to HOLD.