JOBLESS CLAIMS (CNBC)
“The number of Americans filing applications for
unemployment benefits increased last week…Initial claims for state unemployment
benefits rose to 215,000 for the week ended July 27…”
CONSTRUCTION SPENDING (AssociatedPress)
“Spending on U.S. construction projects fell in June by
the largest amount in seven months, reflecting weakness in home building,
nonresidential construction and the largest drop in government projects in 17
years. The Commerce Department said Thursday that spending fell 1.3% in June.”
Story at…
ISM MANUFACTURING INDEX (FXStreet)
“The monthly report published by the Institute for Supply
Management (ISM) today showed that the Manufacturing Purchasing Manager Index
(PMI) in July fell to 51.2 from 51.7 in June…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dropped about 0.9% to 2954.
-VIX rose about 11% to 17.87.
-The yield on the 10-year Treasury dropped to 1.895%.
We were headed for a positive day, up more than 1%, when
the Tweeter in Chief tweeted “more tariffs for China,” more or less. The Index immediately gave up its significant
gains and closed down for a significant loss.
The damage in the S&P 500 cleared some negative
signs: The calm-before-the-storm indicator is now neutral and the Money Trend
Indicator relative to the S&P 500 is no longer stretched enough to give a
negative signal, so it’s neutral too.
Bollinger Bands finally gave us a signal, but it was not
what I expected. Bollinger Bands are now “oversold” and giving a Buy-signal. (I had expected a sell-signal.) RSI was 36, and
would need only to fall to 30 to be a “Buy” in my system. The Bollinger Squeeze
is now over – we had the breakout to the downside, even if it didn’t play out
as we had expected.
Breadth vs the S&P 500 is still giving a bearish signal.
Too many issues are declining for us to feel too bullish.
There were 130 new-lows today along with 258 new-highs. When
new-highs and new-lows are both high, it is not generally a sign of a healthy
market. It wouldn’t take too much more
for the Fosback New-Hi/New-low Logic Index to give a sell-signal. We remember that that was the indicator that
called the top of the 2018-19% correction to the day.
Today was another statistically-significant down-day.
That just means that the price-volume move exceeded my statistical parameters.
Statistics show a statistically significant down-day is
followed by an up-day about 60% of the time.
The 5-10-20 Timer moved from Buy to Neutral.
Overall, my daily sum of 20 Indicators slipped from -3 to
-4 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from -5 to -3.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
The indicators are split with some buys and some sells, and
that’s a confusing scenario, so we’ll just have to wait it out a bit longer.
One good bullish sign – my basket of market internals is still bullish.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: 0
- Bollinger Bands were positive; Breadth vs the S&P
500 was negative.
- Most Recent Day with a value other than Zero: -2 on 31
July (The S&P 500 was too far ahead of its 200-day average w/sentiment,
top-indicator; the S&P 500 was stretched relative to breadth.)
(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…
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 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
Thursday, the PRICE, SENTIMENT, VIX and VOLUME indicators
were neutral. Overall, the Long-Term Indicator is HOLD.
