My readership remains low. Please recommend the Blog if you find it
has value.
Everybody thinks the economy and market advance is long
in the tooth and due to fail in 2020. The data shows otherwise. See the following piece by Chris Ciovvaco:
BREAKOUT FROM CONSOLIDATION PATTERN – “REALLY GOOD THINGS
HAPPEN” (Ciavacco Capital)
“Two years out from the date of the signal [monthly MACD
cross], the average gain in the S&P 500 was just under 30%.” We just had a
monthly MACD cross in October after a long consolidation pattern…and the FED’s
last three moves were cuts! For the time being, we have to have a bullish
view…and ignore the traders calling for a crash - yes, many still are.
LARRY ADAM COMMENTARY EXCERPT (Raymond James)
“This [past] Monday’s equity decline brought fears that
this December could be a repeat of last year’s sell-off…there are ‘noticeable’
differences that make a repeat of last year’s meltdown unlikely…The easing of
financial conditions should be supportive of the equity market. Second,
earnings growth is set to accelerate versus decelerate and our 2020
expectations for 5-6% growth outpaces the 1% pace seen thus far in 2019. Third,
the 10-year Treasury yield rose to 3.23% in 2018, the highest level since 2011,
which was a headwind for equities. Since last December, it has fallen 144 basis
points, and currently 50% of S&P 500 companies have a dividend yield higher
than the 10-year Treasury yield of 1.79%.” Story at…
WHAT THE PANEL SHOULD HAVE TOLD YOU ABOUT IMPEACHMENT
(EpochTimes)
“Impeachment
law is not for amateurs. It rests on English parliamentary
history extending at least as far back as the 1300s. Furthermore, impeachment
standards evolved over time….
We can assume the president might benefit from a
Ukrainian investigation, but that doesn’t mean asking for an investigation was
self-dealing as defined by fiduciary, and therefore by impeachment, law.
There’s nothing unusual or improper about a president asking a recipient of U.S.
foreign aid to address corruption. As for seeking political advantage: If we
punished every politician who did that, they would all be swinging from the
yardarm…It was a good idea to empanel academic experts to provide guidance on
the meaning of “high Crimes and Misdemeanors.” It should be done again, and
this time correctly.” – Rob Natelson, Senior fellow in Constitutional
Jurisprudence at the Independence Institute in Denver, a constitutional
historian, and a former constitutional law professor.. Full commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 slipped about 0.3% to 3136.
-VIX rose about 16% to 15.86.
-The yield on the 10-year Treasury slipped to 1.821.
My daily sum of 20 Indicators dropped from +5 to -1
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations improved from +37 to +41 (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.
We still have not seen a drop big enough to clear my
statistical warning indicator; it is still calling for a one-day, >1% drop
in the S&P 500. We may have more to the pullback.
Sentiment is climbing too, though it is not yet giving a
sell indication.
As I’ve written before, I think any pullback should be
relatively small – say down to the 50-dMA (3046), about 3-5% lower than current
values. A drop to the 100-dMA at 2997 is not out of the question since the
100-dMA is actually on the lower trend line, but it seems like there is a lot
of pent-up buying energy that should prevent a big drop. The S&P 500 is currently down 0.6% from
its recent top
I remain bullish in the long-term; short-term it still
looks like we are in for a bit of a pullback.
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)
T
he top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
For more details, see NTSM Page at…
MONDAY 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
Monday, the VIX dropped to bearish; PRICE was
Bullish; SENTIMENT and VOLUME Indicators were neutral. Overall, the Long-Term
Indicator remained HOLD.
