ISM MANUFACTURING (MarketWatch)
“American manufacturers posted the biggest contraction in
September since the end of the 2007-2009 recession, reflecting a slowdown in
the U.S. and global economies made worse by a tense trade war with China. The
Institute for Supply Management said its manufacturing index fell to 47.8% last month…” Story at…
CONSTRUCTION SPENDING (MarketWatch)
“Outlays for U.S. construction projects rose 0.1% in
August at a seasonally adjusted annual rate of $1.29 trillion, the Commerce
Department reported Tuesday.” Story at…
AUTO SALES (Bloomberg)
“U.S. auto sales took a big step back in September,
setting the stage for hefty incentive spending by carmakers struggling to clear
old models from dealers’ inventory. Results were disastrous for leading Asian
automakers such as Toyota Motor Corp. and Honda Motor
Co., which each suffered double-digit declines…” Story at…
IMPEACHMENT?
I voted Libertarian in the last election because both the
Republicans and the Democrats care more about themselves than the country, i.e.,
I am not a Trump apologist; but the following letter sums up my thoughts on
impeachment…
WSJ- LETTER TO THE EDITOR (WSJ)
“Let’s see: A president suspects corruption involving an
elected politician and a foreign country. Key witnesses and records are located
in the foreign country and outside the legal jurisdiction of the FBI and
Justice Department. He asks the foreign country to help investigate. This is
wrong and impeachable because (a) the target is a Democrat; (b) our elected
officials are allowed to use their position to enrich their families; or (c)
the president is Donald Trump? You decide.” - Geoff Smith. From…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 1.2% to 2940.
-VIX jumped about 14% to 18.56.
-The yield on the 10-year Treasury dipped to 1.638.
After Monday’s positive close, I had hoped for some
further gains. That was not to be.
BEAR SIGNS
-Another Distribution Day. That’s 7 in the last
6-weeks. 5 is a bearish sign.
-MACD of S&P 500 Price is still bearish.
-The Index closed below the 50-dMA. Should we see
consecutive closes below the 50-dMA (or a 3% break lower), we can conclude that
the markets are in a downtrend. That would signal a likely retest the 2840 lows
of August, or perhaps even lower lows.
-Money Trend is headed down.
-New-High/New-low data is getting bad.
-Smart Money is now headed down.
-Only 47% of stocks on the NYSE have been up in the last
10-days.
BULLISH SIGNS
-MACD of Breadth is trying to turn Bullish.
-Bollinger Bands are oversold and RSI is a whisker from
being oversold.
-Today was a statistically-significant down-day. That
just means that the price-volume move exceeded my statistical parameters.
Statistics show that a statistically significant down-day is followed by an
up-day about 60% of the time. Big down-days can signal panic selling; but more
often than not, they signal an end to short-term selling. This time? We’ll see.
Indicators would suggest more downside ahead. There was no evidence of “Turn-around
Tuesday” today.
My daily sum of 20 Indicators declined from +5 to -6
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from -1 to -12.
(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 S&P 500 closed 2.3% below its recent 12 Sep top
and 2.8% down from its all-time high. It looks like the S&P 500 wants to
test the 100-dMA at 2925. It still looks like we are near a bottom for this
weak pullback. Hope I am right - the ISM number is troubling.
I probably won’t make any drastic investment changes
unless I get a sell-signal from the long-term indicator.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a neutral
reading.)
Today’s Reading: +1
Most Recent Day with a value other than Zero: +1 on 1 October.
Bollinger Bands were oversold.
(1) +10 Max Bullish / -10 Max Bearish)
(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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals declined
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 50% invested in
stocks as of 27 Sept 2019 (down from 55%). This is a conservative balanced
position appropriate for a retiree.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the VIX indicator is
Bullish; VOLUME, PRICE and SENTIMENT Indicators were neutral although Volume, a
variant of OBV, was very nearly Bearish. Overall, the Long-Term Indicator
remained HOLD.
