No news is good news…
MARKET REPORT / ANALYSIS
-Friday 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.
Trading was shortened today for the holiday. As a result,
we saw low trading volumes, so today’s data doesn’t mean much.
We can, however, look at recent highs and make an important
conclusion. At new all-time highs on the
S&P 500, the 5-year average of stocks making new-highs is 6.7% (as a
percentage of stocks on the NYSE). If the percentage of stocks making new-highs at the S&P 500
all-time high was low, we would be concerned that the advance was too
narrow and didn’t involve enough stocks.
At the all-time high on 27 Nov, 5.5% of stocks on the NYSE made new
highs. This is broad enough that we are
not currently worried about the breadth of the market.
My daily sum of 20 Indicators slipped from +13 to
+11 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed sum that negates the daily fluctuations rose from +16 to +30
(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)
FRIDAY 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
Friday, 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.
