JOBLESS CLAIMS (kitco.com)
“The U.S. labor market remains on solid footing after
initial weekly jobless claims rose in line with expectations for the week to
Saturday, according to the latest data employment data. Thursday the U.S. Labor
Department said that weekly jobless claims rose by 4,000 to 214,000…” Story at…
HOUSING STARTS (MarketWatch)
“Construction on U.S. new houses fell more than 9% in
September, but a recent surge in permits suggests the decline in so-called
housing starts is just a brief pause in a real estate market reinvigorated by
lower mortgage rates.” Story at…
PHILADELPHIA FED INDEX (MarketWatch)
“The Philadelphia Federal Reserve’s manufacturing index
fell to 12.0 in September after registering a reading of 16.8 in August.” Story
at…
INDUSTRIAL PRODUCTION (CNBC)
“U.S. factory output slumped 0.5% in September, the
Federal Reserve said Thursday. A strike at General Motors caused a steep decline in auto
production amid broader struggles for manufacturers.” Story at…https://www.cnbc.com/2019/10/17/us-industrial-production-september-2019.html
“Crude oil prices fell sharply today after the Energy
Information Administration reported a 9.3-million increase in crude oil inventories
for the week to October 11. The EIA said that at 434.9 million barrels crude
oil inventories were 2 percent above the five-year average for the season.”
Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.3% to 2998.
-VIX rose about 0.8% to 13.79.
-The yield on the 10-year Treasury slipped to 1.755.
I calculate sentiment (%-bulls) based on funds invested in
selected long/short Rydex-Guggenheim funds.
Relative to my sell signals, sentiment is not close to a sell-signal.
This suggests the market can go higher and we expect new all-time highs.
My daily sum of 20 Indicators improved from +6 to
+7 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations rose from -31 to -13.
(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.
Bollinger bands are getting stretched (a slightly bearish
sign), but RSI is solidly neutral and I use these two indicators together. They both must agree before I will pay much
attention.
When we look at look at long-term indicators, Price
turned positive today; Volume and VIX indicators were positive yesterday. This is a strongly bullish sign since the
S&P 500 is coming off the lows of June and August. Given that indicators
look good, it is odd that the S&P 500 has seen a lot of late-day selling
over the last month. In theory, that’s
when the Pros trade and this indicator is quite negative. In addition, the
overbought / oversold index remained “overbought” today based on breadth
measures of advance-decline numbers. This indicator is an old one and is always
very early to make an overbought call. I
will ignore it for now.
In spite of a few negatives, I remain bullish for
the time being.
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 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 60% invested in
stocks as of 7 Oct 2019 (up from 50%). This is a conservative balanced position
appropriate for a retiree. You may wish to have a higher or lower % invested in
stocks depending on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday, the PRICE indicator was
positive; VIX, VOLUME and SENTIMENT Indicators were neutral. Overall, the
Long-Term Indicator slipped to HOLD.
