LARRY ADAM COMMENTARY EXCERPT (Raymond James)
“Favorable seasonality and the breakout to new highs are
both historically indicative of above-average forward returns… and contribute
to his [Madere, Senior portfolio strategist, Equity Portfolio & Technical
Strategy, Raymond James] positive stance toward equities. Temporary pullbacks
offer an opportunity to selectively add to portfolios.” Commentary at…
PAUL SCHATZ COMMENTARY EXCERPT (Heritage Capital)
“The last month of the year is typically a very bullish
one, especially when it begins in rally mode. 2018 was certainly an outlier
that caught the masses off guard. I do not believe 2019 will look anything like
a year ago and I expect more new highs into January before things possibly
change.” Commentary at…
OMG! NO TRUMP IMPEACHMENT STORY IN MY MSN NEWS FEED
YESTERDAY??!
1st day in more than 200. This won’t last; but
it does suggest that public interest in impeachment might be waning. Uh-oh…There’s
one already…respite didn’t even last 2 hours.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 0.7% to 3093.
-VIX rose about 7% to 15.96.
-The yield on the 10-year Treasury slipped to 1.718.
It looks like the pullback we expected, and predicted, is
underway. 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.
Still, I expect that the pullback will be bought so 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. It really comes down to how many investors have
a Fear-of-Missing-Out (FOMO) mentality. With record cash out there, I suspect
we’ll see buyers jump in sooner rather than later. We’ll see.
My daily sum of 20 Indicators dropped from -3 to -7
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations slipped from +28 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.
Today was another statistically-significant down-day.
That just means that the price-volume move exceeded my statistical parameters.
Statistics show that a statistically-significant, down-day is followed by an
up-day about 60% of the time.
I remain bullish in the long-term; short-term we are in
for a bit of a pullback, say in the 3-5% range off the 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)
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
NEGATIVE 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
Tuesday, the PRICE, SENTIMENT, VIX and VOLUME Indicators
were neutral. Overall, the Long-Term Indicator remained HOLD.
