JOBLESS CLAIMS (MarketWatch)
“The number of Americans who applied for unemployment
benefits at the end of November fell to the lowest level in seven months and
returned close to a 50-year low, but the sharp decline in jobless claims likely
stems in part from the Thanksgiving holiday. Initial jobless claims, a rough
way to measure layoffs, dropped 10,000 to 203,000 in the seven days ended Nov.
30…” Story at…
FACTORY ORDERS (Reuters)
“New orders for U.S.-made goods rebounded in October
after two straight monthly declines, lifted by rising demand for machinery and
transportation equipment…Factory goods orders increased 0.3% also as bookings
for computers and electronic products rose…” Story at…
PAUL SCAHTZ COMMENTARY EXCERPT (Heritage Capital, 4 Dec)
“…the Dow has pulled back to a logical area to find
buyers. The S&P 500 and NASDAQ 100 still have another 2% or so to go. The
weaker S&P 400 and Russell 2000 are basically there. However, I still don’t
believe the all-clear has been sounded. Stocks are supposed to bounce from
here, so don’t be surprised if they regain all that was lost on Tuesday.
However, I don’t have strong conviction that the mild pullback is 100%
complete.” Commentary at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.2% to 3117.
-VIX fell about 2% to 14.52.
-The yield on the 10-year Treasury rose to 1.812.
Checking the numbers today, I see that we still have not
seen a drop big enough to clear my statistical warning indicator; it is still
calling for a >1% drop in the S&P 500. It seems unlikely that the
pullback has ended even though there were some positive signs today.
As I’ve written before, I think any pullback should be
relatively small – say down to the 50-dMA (3033), about 2% lower than current
values. A drop to the 100-dMA at 2992 is not out of the question since the
100-dMA is actually on the lower trend line.
My daily sum of 20 Indicators improved from -2 to +2
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations improved from +21 to +26 (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 VIX indicator is bullish indicating the VIX is falling
sharply. That’s a good sign for the
bulls. The short-term Internals indicator flipped to positive too. I don’t think we are out of the woods yet,
but these developments suggest there are a lot of investors who want back in
the market and will buy even a tiny dip.
I remain bullish in the long-term; short-term it still
looks like we are in for a bit of a pullback, say in the 3-5% range off the top.
As of today, the S&P 500 is down 1.1% from its recent top.
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)
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
improved to 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 VIX was bullish; PRICE, SENTIMENT,
and VOLUME Indicators were neutral. Overall, the Long-Term Indicator remained
HOLD.
