JOBLESS CLAIMS (MarketWatch)
“The number of people who applied for jobless benefits in
early August climbed to a six-week high of 220,000, though the level of layoffs
remains near a post 2008 recession low.” Story at…
RETAIL SALES (CNBC)
“The data suggested concerns over slower global growth
that have roiled financial markets haven’t dampened consumer confidence. The
Commerce Department says retail sales rose a healthy 0.7% last month, after a
0.3% gain in June.” Story at…
INDUSTRIAL PRODUCTION (Reuters)
“U.S. manufacturing output dropped in July, ending a run of
two months of growth.
The Federal Reserve on Thursday said manufacturing
production shrank 0.4% last month…” Story at…
PHILADELPHIA FED INDEX (Advisor Perspectives)
“The latest Manufacturing Index came in at 16.8, down 5.0
from last month's 21.8. The 3-month moving average came in at 13.0, up from
12.9 last month. Since this is a diffusion index, negative readings indicate
contraction, positive ones indicate expansion.” Story at…
HUAWEI HELPS GOVERNMENT SPY IN AFRICA (WSJ)
“Huawei Technologies Co., the world’s
largest telecommunications company, dominates African markets, where
it has sold security tools that governments use for digital surveillance and
censorship. But Huawei employees have provided other services, not disclosed
publicly. Technicians from the Chinese powerhouse have, in at least two cases,
personally helped African governments spy on their political opponents,
including intercepting their encrypted communications and social media, and
using cell data to track their whereabouts, according to senior security
officials working directly with the Huawei employees in these countries.” Story
at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.3% to 2848.
-VIX dipped about 4% to 21.18.
-The yield on the 10-year Treasury rose slightly to 1.528%.
Now we’re waiting for a retest of the 2841 low. I won’t
repeat all of the signs – there hasn’t been a lot of change.
We had another Hindenburg Omen today and we had one
yesterday. Basically, this indicator is calling for a crash, or a big drop.
There is always a possibility that we’ve had the drop and this is just
hangover. New-highs and new-lows are the battleship of indicators – it takes a
long time for them to turn.
The long-term and Short-term Fosback indicators are still
giving a sell-signal, “sharp-drop” warning. Both, 52-week, new-highs and
new-lows are too high and have been for an extended period. (Battleship again.)
MACD of Breadth remained the bearish side today. MACD of
S&P 500 price remains negative.
Overall, my daily sum of 20 Indicators improved
from -15 to -13 (a positive number is bullish; negatives are bearish) while the
10-day smoothed version that negates the daily fluctuations declined
from -102 to -111. (These numbers sometimes change after I post the blog based
on data that comes in late.) Most of these indicators are short-term.
We’ve now seen a pretty good cluster of -3 Top / Bottom
Indicator readings with one -4 reading, last week and another Tuesday. Today’s value was -3. In the past this has
occurred almost exclusively during corrections. This further suggests that this
pullback is not over, but it is not impossible that the correction is close to
ending.
Until we see further evidence, it still looks like we are
headed down. How much farther remains to be seen. The numbers were so bad at
the low yesterday, one wonders whether we have seen the bottom.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s
Reading: -3
- Breadth vs the S&P 500 is extended for 5-days so it
was negative; both Long-term and Short-term Fosback Logic Index indicators were
bearish.
- Most Recent Day with a value other than Zero: -3 on 14
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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
improved to 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 30% invested in
stocks as of 5 August 2019.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday,
VOLUME and VIX indicators were negative. The SENTIMENT and PRICE Indicators
were neutral. Overall, the Long-Term Indicator remains SELL. It was first
“Sell” on 5 August.
