“Chicago PMI slips from nine-year high…The Chicago
PMI slipped 2.1 points to 65.7, MNI Indicators said Wednesday.” Story at…
ADP EMPLOYMENT (USA Today)
“Businesses added 234,000 jobs in January, payroll
processor ADP said Wednesday, marking a robust start to the year for
hiring and possibly signaling that the government on Friday will report a
rebound in job growth after a weak number in the final month of 2017.” Story
at…
CRUDE INVENTORIES (OilPrice.com)
“As investment banks become increasingly bullish on crude
oil, the Energy Information Administration reported a 6.8-million-barrel build in
U.S. crude oil inventories for the week ending January 26. The report comes a
day after the American Petroleum Institute surprised markets once again with an
estimated build of 3.23 million
barrels.” Story at…
FOMC RATE DECISION (Bloomberg)
“Federal Reserve officials, meeting for the last time under
Chair Janet Yellen, left borrowing costs unchanged while adding emphasis to
their plan for more hikes, setting the stage for an increase in March under her
successor Jerome Powell. “The committee expects that economic conditions will
evolve in a manner that will warrant further gradual increases in the federal
funds rate,” the policy-setting Federal Open Market Committee said in a
statement Wednesday in Washington, adding the word “further” twice to previous
language.” Story and video at…
THE 10-YEAR LINE IN THE SAND (Marketwatch)
“The big number this week could be the 3% level for the
10-year Treasury yield, with strategists buzzing about whether a rise to that
spot will upset stocks….“No one knows what the number is on 10s when this
really starts to unravel. But if you’re the type who puts any stock in
psychological levels, 3% has a not-so-nice ring to it,” says the blogger behind the Heisenberg Report for our call of the day.”
Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 1pt to 2824.
-VIX dropped about 8% to 13.54.
-The yield on the 10-year Treasury slipped a bit to 2.704%.
My sum of 17 Indicators improved from -9 to -4 today. (A
“-” number means that most indicators are bearish.) On a Longer term, smoothed
basis to avoid the daily fluctuations, the indicators are falling and looking
bearish.
Topping indicators have been warning of a top for several
weeks. In addition, over the last 10-days, only 45% of stocks have advanced and
only 48% of volume has been up on the NYSE. These signals are suggesting a
downtrend, but certainly don’t guarantee it.
There was a strong ending today as the S&P 500 made a
big move up in the last hour of trading (a bullish sign); then it slipped for
the last 15 minutes into the close. Talk about mixed signals! The closing Tick
(sum of the last trades of the day) was -301 and that’s a bearish sign for the
day. Overall, we’d have to say the close was somewhat bearish. I think a worse
day would have been a big up day.
I did cut back some on stocks. I am now down to 40% invested
in stocks. I am taking a very conservative stance even though the most likely
outcome is only a 5% pullback – if we do indeed get a pullback. I’ll get back to
fully invested quickly if this turns out to be a false alarm.
I am bearish short-term. Longer term I remain a bull.
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. Avoid GE, Procter
& Gamble and Merck. Their 120-day moving averages are falling.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
to 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).
LONG TERM INDICATOR
Wednesday, the Price indicator was positive; Sentiment, Volume &
VIX indicators were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I shifted to 40% stocks in the S&P 500 Index fund
(C-Fund) with the remainder is 60% G-Fund (Government securities). This is a
conservative position given the number of negative signs observed recently. My
normal fully invested position is only 50% so I am not drastically bearish.
For Government employees: Making a TSP change late in a
month preserves 2 moves for the next month since the TSP only allows 2 changes
per month. After that one can only add to the G-Fund.
