JULY CASS FREIGHT INDEX REPORT (Cass Information Systems)
“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…
ADS BUSINESS CONDITIONS (Philadelphia FED)
ADS Business Conditions declined as of 8/10/2019. The
next update is 22 August at 2PM. I added
an orange line at the current value of the Index to note that the recession
started in 2007 at this value of the ADS Index.
Chart from…
PAUL SCHATZ COMMENTARY EXCERPT (Heritage Capital)
“With the bulls having fended off the bears for now, the
next key price area will be around 26,450. The Dow and its index cousins all
need to close above their recent rally highs to really confirm the worst is
behind us and all-time highs are up next. At this point, the bulls have the
ball…” - PAUL SCHATZ, PRESIDENT, HERITAGE CAPITAL. Commentary at…
WEEKLY INVESTMENT STRATEGY EXCERPT (Raymond James)
“The combination of depressed Treasury yields, positive
earnings growth in both 2019 and 2020, and a more dovish Fed should provide a
more positive environment for equities moving forward. Short-term volatility
will continue to challenge investors to continue to remain positive during
pullbacks and to not be complacent during rallies. We believe that investors
who diversify across asset classes and stay true to their risk profile will be
able to strike the right note.” – Raymond James, CIO Larry Adam
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 1.2% to 2924.
-VIX dropped about 8% to 16.88.
-The yield on the 10-year Treasury rose to 1.610%.
77% of the volume was up-volume today. That was a little
lower than the 80% I would have like to have seen, but sometimes that’s what
you get. I think we have seen the bottom for a while, but the signals haven’t
been strong that would give us more confidence. Still, as noted earlier today,
my Market Internal indicator (a basket of internals) has turned positive; Money
Trend is now bullish; My Volume indicator has turned bullish (a variant of
on-balance-volume); the McClellan Oscillator has turned positive and that
cancels the bearish Fosback and Hindenburg indicators; Smart Money is headed up.
Looks like the pullback is over for the near term.
There are still some bear signs:
MACD of Breadth is still bearish and MACD of S&P 500
price is still headed down. Utilities are still outperforming the S&P 500.
A lot of indicators are neutral so the totals aren’t super bullish.
Overall, my daily sum of 20 Indicators improved
from -5 to +6 (a positive number is bullish; negatives are bearish) while the
10-day smoothed version that negates the daily fluctuations improved
from -106 to -87. (These numbers sometimes change after I post the blog based
on data that comes in late.) Most of these indicators are short-term.
I plan to add to my stock allocation with a target of 55%
in stocks at the close Tuesday unless we have a really crazy day.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a neutral
reading.)
Today’s Reading: -2
- Both Long-term and Short-term Fosback Logic Index
indicators were bearish, but this is suspect since the McClellan Oscillator is
positive and that cancels the Fosback indicators.
- Most Recent Day with a value other than Zero: -2 on 19
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 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)
*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…
MONDAY 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.
I made some stock purchases today. My current stock
allocation is about 35% invested in stocks as of 19 August 2019. As of the
close tomorrow, I expect to be at 55% invested unless we have a really crazy
day Tuesday.
INTERMEDIATE / LONG-TERM INDICATOR
Monday,
the VOLUME indicator was positive; VIX, SENTIMENT and PRICE Indicators were
neutral. Overall, the Long-Term Indicator remained HOLD.
