JOBLESS CLAIMS (MarketWatch)
“The number of Americans applying for unemployment
benefits fell for the second week after a big spike earlier in December.
Initial jobless claims fell by 13,000 to a seasonally adjusted 222,000 in the
week ended Dec. 21…For now, broader readings of labor market conditions remain
quite positive.” Story at…
PHILADELPHIA FED ADS BUSINESS CONDITIONS INDEX (Philly
Fed)
Chart from Philly FED at…
The chart looks good. Data is thru 21 Dec.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 slipped about a point to 3240.
-VIX slipped about 0.2% to 12.65.
-The yield on the 10-year Treasury slipped to 1.895.
We are seeing low-volume over the Holiday period so far, so
we may not get much valuable information until after the new year.
It still looks like that small pullback is coming;
probably starting after the pros return from their holiday break.
There are still 3 topping-indicators calling a top, so no
change here. The top indicators are: RSI was way overbought; the S&P 500 is
too far ahead of advancing issues on the NYSE (as it has been for the last 9
trading days); and the S&P 500 is too far above its 200-dMA when sentiment
is considered. It’s 9.4% above tits 200-dMA without considering
sentiment and that is a high number too.
My daily sum of 20 Indicators declined from +1 to -1
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations improved from +26 to +27 (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. This isn’t a strong
signal since the number has been drifting around zero.
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.
Any pullback should be small: Breadth remains good; the
Fosback New-High/New-Low Logic Index is much closer to a buy than a sell.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -3
Most Recent Day with a value other than Zero: -3 on 26
December (RSI was overbought; 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.
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals slipped
to NEUTRAL on the market, but this may be due to the overall low volume. With
overall volume down, up-volume is reduced and that’s the internal that slipped
to neutral.
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 remained 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.
