CONSUMER PRICE INDEX (Reuters)
“U.S. consumer prices unexpectedly rose in February but
are likely to decline in the months ahead as the coronavirus outbreak depresses
demand for some goods and services, outweighing price increases related to
shortages caused by disruptions to the supply chain…The Labor Department said
its consumer price index increased 0.1% last month, matching January’s gain…”
Story at…
EIA CRUDE INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 7.7 million barrels from the
previous week. At 451.8 million barrels, U.S. crude oil inventories are about
2% below the five-year average for this time of year.” Petroleum status report
at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell about 4.9% to 2741.
-VIX rose about 14% to 53.9.
-The yield on the 10-year Treasury rose to 0.872.
Today we saw another 90% down-volume day. This is the
fifth one in 12 trading-sessions. As Lowry Research noted, “…our 69-year record
shows that declines containing two or more 90% Downside Days usually persist,
on a trend basis, until investors eventually come rushing back in to snap
up what they perceive to be the bargains of the decade and, in the process,
produce a 90% Upside Day.” - Lowry Research.
Overall, the daily sum of 20 Indicators remained
-10 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that negates the daily fluctuations improved from -107 to -104.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term. We continue to see some
improvement; but not enough to make a difference!
The “average” correction has been 12% since 2009. In the
past 15 years or so, corrections greater than 10% have lasted 68 days top to
bottom. We’re at day 15 and the S&P
500 is now 19% below its all-time top, on 19 Feb. It is 10.2% below its
200-dMA. The long-term, bottom trend-line that includes the low of Feb 2016 and
Dec 2018 suggests that a bottom below around 2550 to 2600 is not likely,
although I think most investors have under-estimated the severity of this correction to some extent.
Wednesday, we retested the 9 March (Monday) low, but the
test failed. The chart looks good, but no bottom is indicated in today’s data. The positive chart may give us a strong bounce.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: +5**
Most Recent Day with a value other than Zero: +5 on 11
March. (The S&P 500 Index is too far below the 200-dMA when sentiment is
included; RSI is oversold; Breadth has made a bullish divergence from the
S&P 500; Money Trend has made a bullish divergence from the Index; and
Smart Money {late-day-action} is oversold.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher is a Buy
Sign.
**The Top/Bottom indicator gave a BUY signal Monday
and again today; but this indicator only goes back to 2011. Monday was a strong
BUY signal that has only been equaled once in the last 9 years. That was at the low of the 2018, 20%
correction. So, we have probably seen
the bottom yesterday; however, with this health crisis driving the train, I
will continue to look for a confirmation signal. We expect to get that at a retest.
MOMENTUM ANALYSIS:
CAUTION: Momentum is not a good tool during market
declines.
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
to 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 40% invested in
stocks as of 3 March. (I previously dropped stock allocations to 45% on 27
January). You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Wednesday, the VOLUME and VIX gave bear signals; The
SENTIMENT and PRICE Indicators were neutral. The Long-Term Indicator remained SELL. The important
sell signal was 24 February and I sold before that due to other signals.
