BEIGE BOOK (Federal Reserve)
“Economic activity generally continued to expand modestly
in the final six weeks of 2019. The Dallas and Richmond Districts noted
above-average growth, while Philadelphia, St. Louis, and Kansas City reported
sub-par growth. Consumer spending grew at a modest to moderate pace, with a
number of Districts noting some pickup from the prior reporting period. On
balance, holiday sales were said to be solid, with several Districts noting the
growing importance of online shopping.” Beige book at…
PPI (MarketWatch)
“The wholesale cost of U.S. goods and services barely
rose in December, suggesting there was little inflation building up in the
heart of economy at the end of 2019.
The producer price index inched up 0.1% last month…”
Story at…
EMPIRE STATE MANUFACTURING (Advisor Perspectives)
“The diffusion index for General Business Conditions at
4.8 was an increase of 1.3 from the previous month's 3.5…The Empire State
Manufacturing Index rates the relative level of general business conditions in
New York state. A level above 0.0 indicates improving conditions, below
indicates worsening conditions.” Commentary and charts at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.2% to 3289.
-VIX rose about 0.2% to 12.42.
-The yield on the 10-year Treasury was 1.793.
Indicators continue to improve…
My daily sum of 20 Indicators improved from +6 to
+8 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed sum that negates the daily fluctuations improved from -2 to +10
(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, I‘ve been expecting a pullback, but it has been slow to
develop. Given that indicators are improving, one wonders if perhaps we’ll get
to February before we see a dip. February is when the FED will begin reducing its “repo”
operations.
Any pullback should be small: there were a good number of
new-highs when the S&P 500 made its all-time high today; 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: -1
Most Recent Day with a value other than Zero: -1 on 15
January (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)
*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
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
Wednesday, the PRICE indicator was Bullish; VIX,
VOLUME and SENTIMENT Indicators were neutral. Overall, the Long-Term Indicator
remained to HOLD.
