ADP EMPLOYMENT CHANGE (ADP via prnewswire)
“Private sector employment increased by 202,000 jobs from
November to December according to the December ADP National Employment Report®. …’As 2019 came to a
close, we saw expanded payrolls in December,’ said Ahu Yildirmaz, vice
president and co-head of the ADP Research Institute. ‘The service providers
posted the largest gain since April, driven mainly by professional and business
services. Job creation was strong across companies of all sizes, led
predominantly by midsized companies.’" Press release at…
EIA CRUDE INVENTORIES (OilPrice.com)
“Crude oil prices fell further after the Energy
Information Administration reported a crude oil inventory build of 1.2 million
barrels for the first week of the new year.”
Story at…
XLU-S&P 500 SPREAD SUGGESTS TROUBLE (NTSM Blogger)
This chart shows the S&P 500 in black and the spread
between the Utilities ETF (XLU) and the S&P 500 Index in red. The spread is constructed so that a falling
red line indicates that the utilities are out performing the Index. If
utilities are outperforming the S&P 500, as indicated above, the market has
issues and is likely to dip...anytime now.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.5% to 3237.
-VIX slipped about 2% to 13.45.
-The yield on the 10-year Treasury rose to 1.877.
We haven’t taken out the old high on a closing basis yet,
so I’m still holding my small short position.
When we look at top indicators, we see that we had a -4 (top call) on 20
December. The S&P 500 is up 1% since then so its not like the markets are
running away from us. I may still have to cover the short if we close above the
prior high of 3258; we almost got there today.
If we see a really big up move, say around 1%, I won’t cover since that
would be an indication that Friday would likely be a down-day. I could cover on
Friday or at least reassess the position.
The MACD of S&P 500 price remains bearish as does my
MACD of breadth on the NYSE.
My daily sum of 20 Indicators improved from -5 to 0
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations declined from -18 to -21 (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.
I remain bullish in the long-term; short-term, it looks
like we are in for a bit of a pullback-but perhaps with less conviction.
Any pullback should be small: there were a decent number
of new-highs when the S&P 500 made its all-time high recently; the Fosback
New-High/New-Low Logic Index remains much closer to a buy than a sell.
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 8
January (Divergence between Breadth and the S&P 500 is bearish; 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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
NEUTRAL 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
Wednesday, the PRICE indicator was Bullish; VIX,
VOLUME and SENTIMENT Indicators were neutral. Overall, the Long-Term Indicator
remained to HOLD.
