CONSUMER PRICE INDEX (MarketWatch)
“Consumer inflation in the U.S. was held in check in September
by falling prices of gasoline and used vehicles, giving the Federal Reserve
further cause to cut interest rates if the economy gets any weaker. The consumer-price
index was flat in September…” Story at…
JOBLESS CLAIMS (Bloomberg)
“Applications for unemployment benefits in the U.S.
unexpectedly declined to a three-week low despite a strike by General Motors
Co. workers that continues to reverberate through supporting industries. Jobless
claims dropped by 10,000 to 210,000 in the week ended Oct. 5…” Story at…
MARKET REPORT / ANALYSIS
Thursday the S&P 500 rose about 0.9% to 2919.
-VIX fell about 6% to 17.58.
-The yield on the 10-year Treasury rose to 1.666.
VIX is falling fast now and the VIX indicator within the
NTSM Medium /Long-Term Indicator turned bullish today. Looks like the Options Boys are bullish and
that’s good news. The VIX indicator is
one of the better indicators within the NTSM system.
Our call that the current small pullback
ended on 8 October (call made after-hours on 8 October) may turn out to be
correct after all. We’ve had 2 strong up-days since then.
My daily sum of 20 Indicators improved from -6 to -1
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -60 to -55.
(These numbers sometimes change after I post the blog based on data that comes
in late.) A reminder: Most of these indicators are short-term.
The all-time high of 3028 (3% higher than today’s close)
is probably in the target zone. Whether the
Index can break meaningfully above that level remains to be seen. My guess is
that it can; but why guess? We’ll see when it gets there.
I remain bullish.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: 0
Most Recent Day with a value other than Zero: +2 on 3
October.
(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)
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…
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 60% invested in
stocks as of 7 Oct 2019 (up from 50%). This is a conservative balanced position
appropriate for a retiree.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday, the VIX indicator was
positive; VOLUME, PRICE and SENTIMENT Indicators were neutral. Overall, the
Long-Term Indicator remained HOLD.
