FED BEIGE BOOK (MarketWatch)
The U.S. economy expanded “modestly” from October through
mid-November and the outlook “generally remained positive,” according to the
Federal Reserve’s latest findings. The Fed’s Beige Book was slightly more upbeat compared to its
previous assessment last month, when the central bank said the economy was
expanding at a “slight to modest pace.” Story at…
JOBLESS CLAIMS (MarketWatch)
The number of people who applied for unemployment
benefits fell sharply in the week before the U.S. Thanksgiving holiday, putting
jobless claims back near historic lows and reflecting the persistent strength
in the U.S. labor market. Initial jobless claims declined by 15,000 to 213,000
in the seven days ended Nov. 23…” Story at…
GDP (Reuters)
“U.S. economic growth picked up slightly in the third
quarter, rather than slowing as initially reported, and there are signs the
downturn in business investment could be drawing to a close….Gross domestic
product increased at a 2.1% annualized rate, the Commerce Department said in
its second estimate of third-quarter GDP.” Story at…
DURABLE ORDERS (CNBC)
“Orders to U.S. factories for big-ticket manufactured
goods tumbled in September by the largest amount in four months….The Commerce
Department said Thursday that orders for durable goods dropped 1.1% in
September…” Story at…
CHICAGO PMI (MarketWatch)
“A measure of economic activity in the Midwest showed
persistent contraction but did improve slightly in November…The Chicago
Purchasing Management Index registered at 46.3 in November from an unrevised
43.2 in October.” Story at…
PERSONAL INCOME / PCE INFLATION (Nasdaq)
“The Commerce Department released a report on Wednesday
showing U.S. personal income came in nearly flat in the month of October, while
personal spending rose in line with economist estimates…A reading on inflation
said to be preferred by the Federal Reserve [PCE] showed the annual rate of
core consumer price growth slipped to 1.6 percent in October from 1.7 percent
in the previous month.” Story at…
CRUDE INVENTORIES (OilPrice.com)
“Oil fell about 1% on Wednesday after a report showing
U.S. crude inventories grew unexpectedly last week and gasoline stocks surged,
but optimism that a U.S.-China trade deal would be reached soon limited losses.”
Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.4% to 3164
(another new-high).
-VIX rose about 2% to 11.75. (The Options Boys may be skeptical
of this rally.)
-The yield on the 10-year Treasury rose to 1.765.
I’ve posted charts and a link to Chris Ciovacco’s
analysis recently. See…
His thesis is that the correction low on 24 Dec 2018 was
a major correction low equal in strength (though not %-loss) to the Dot.com and
Financial crashes of 2001 and 2009. As such, he has suggested that we are now
in a secular bull-market and we must recognize that gains in the market could
be much higher than market participants currently expect. (I am surprised to
see traders still calling for massive losses and a stock market crash soon.)
Looking at my stats, I see that the 10-day % of stocks advancing on the NYSE
reached a low of 32% at the 24 Dec 18 low.
That was lower than the value of 40%-advancing at the 2009 crash low. Chris
Ciovaccio seems to have a good point. We must be prepared for a downturn; but
also open to potentially big gains ahead.
For now, Holiday and end-of-month / first-of-month gains
are underway with some fear-of-missing-out action too. I’ve been warning of a short-term
drop/top in the S&P 500 based on statistical analysis of price-volume since
early November; that warning is still valid based on a continued low reading of
statistical moves in price-volume. Perhaps by Monday we’ll see some weakness.
My daily sum of 20 Indicators improved from +11 to
+13 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed sum that negates the daily fluctuations rose from +2 to +16
(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.
While a pullback or pause is suggested by a few
indicators, Seasonality is bullish for the next month and Sentiment is high,
but not extreme. Overall, indicators are quite bullish. The markets may keep
moving up for a while longer. It’s anyone’s guess regarding what will cause a
dip or when it will occur. I think we could see a dip anytime, probably
starting Monday, but I expect that it will be bought so any pullback should be
relatively small – say down to the 50-dMA, about 3-4% lower than current values.
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: -1 on 20
November (RSI was overbought).
(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)
Apple is up 20% over the last 2-months. It remains #1 in
the momentum ranking.
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…
WEDNESDAY 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
Wednesday, the VIX and PRICE indicators were
positive; the SENTIMENT and VOLUME Indicators were neutral. Overall, the
Long-Term Indicator remained BUY. The important BUY was the one we
issued 29 August; we reinforced that bullish view again on 3 October. Today’s
BUY signal just means that conditions are good. Sometimes the NTSM will issue a
buy-signal at a top. I don’t think that is the case this time – I remain
bullish. The falling VIX is a bullish signal, though we are overdue for a small
pullback.
