JOBLESS CLAIMS (MarketWatch)
"The number of Americans applying for unemployment
benefits fell in mid-December after a post-Thanksgiving surge, returning closer
to the extremely low level of layoffs that has prevailed over the past few
years. Initial jobless claims fell by 18,000 to a seasonally adjusted 234,000
in the seven days ended Dec. 14…” Story at…
PHILADELPHIA FED INDEX (Reuters)
“Factory activity in the U.S. mid-Atlantic region slowed
more than expected in December, matching its lowest level since June. The
Philadelphia Federal Reserve said its business activity index fell to 0.3 in
December…” Story at…
EXISING HOME SALES (YahooFinance)
“The National Association of Realtors reported that sales
of existing homes fell 1.7% in November, way more than the expected 0.4% drop.”
Story at…
LEI (Conference Board via prnewswire)
“The Conference Board Leading Economic Index® (LEI) for
the U.S. was unchanged in November, remaining at 111.6 (2016 = 100),
following a 0.2 percent decline in both October and September. ‘The US LEI was
unchanged in November after three consecutive monthly declines. Strength in
residential construction, financial markets, and consumers' outlook offset
weakness in manufacturing and labor markets,’ said Ataman Ozyildirim, Senior Director
of Economic Research at The Conference Board. ‘While the six-month growth rate
of the LEI remains slightly negative, the Index suggests that economic growth
is likely to stabilize around 2 percent in 2020.’" Press release at…
US IS EVENLY SPLIT ON TRUMP’S REMOVAL (WSJ)
“The three-month House inquiry has failed to build
majority support among Americans for or against impeaching President Trump,
leaving the nation evenly divided, 48% to 48%, on whether to remove the
president from office, a new Wall Street Journal/NBC News poll finds.” Story at…
My cmt: The print version of this article included an
interesting graphic that showed 44% believe that “Trump’s previous actions
before the situation with Ukraine were already grounds for impeachment.” Wow…that’s
amazing. I am no Trump fan: I think he is uncouth, inarticulate and a philanderer
who is on the whole completely un-presidential; but none of those qualities
make him impeachable under the Constitution – just my opinion. Of course, the
polls don’t go deep enough to tell us why the 44% was already convinced that he
should be impeached.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 climbed about 0.5% to 3205. (Another
all-time high.)
-VIX dipped about 0.6% to 12.50.
-The yield on the 10-year Treasury was up slightly to 1.923.
The traders who have tried to short this rally are underwater.
Thank goodness I gave up short-term trading! Here’s a quote from a trader
board; “For me, this is one of the hardest ST trading environments I
can remember in the last decade.”
Keep it coming Santa!
Graphic from seekingalpha.com.
My daily sum of 20 Indicators improved +3 to +4 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations improved from +20 to +22 (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 rest of today’s blog will look familiar…
As I’ve written before (way too much it seems), we’re due
for a pullback, but I think any pullback should be relatively small – say down
to the 50-dMA (3085), about 3-5% lower than current values. A drop to the
100-dMA at 3011 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.
We also note that the Fosback New-High/New-Low Logic
Index is much closer to giving a Buy indication than a Sell indication. This is
just another sign that any selloff should be short-lived.
At today’s new all-time high we saw decent Breadth,
another sign of a market that is generally healthy, but somewhat extended.
I remain bullish in the long-term; short-term - it’s STILL
the broken record report - 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: -2
Most Recent Day with a value other than Zero: -2 on 19
December (Breadth vs S&P 500 is
calling for a top; and the S&P 500 is too far above its 200-dMA when
sentiment is considered).
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher 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.
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 and VOLUME indicators were
Bullish; VIX and SENTIMENT Indicators were neutral. Overall, the Long-Term
Indicator improved to BUY. At
this point it only means that conditions have been good recently. The long-term indicator is designed to signal
a BUY after a bottom as conditions improve. Sometimes it can signal a buy at a
Top when conditions look good. At present, I expect a small pullback so we are
looking for a better buying opportunity.
