GDP – 2nd Estimate … Chicago PMI … Crude Inventories … Stock Market Analysis … ETF Trading … Dow 30 Ranking

GDP (MarketWatch)

“The annual pace of growth in the U.S. was trimmed to 2.5% from 2.6% in the fourth quarter, leaving a picture of a steadily growing economy intact. A slower inventory build accounted for the downward revision.” Story at… 

https://www.marketwatch.com/story/fourth-quarter-gdp-lowered-to-25-2018-02-28

 

CHICAGO PMI (MarketWatch)

"Chicago PMI slipped in February to a reading of 61.9, a six-month low, from 65.7 in January… ‘despite the Barometer’s broad-based decline, activity remains upbeat,’ said Jamie Satchi, economist at MNI Indicators.” Story at… 

https://www.marketwatch.com/story/chicago-pmi-slips-to-six-month-low-in-february-2018-02-28

 

CRUDE INVENTORIES (OilPrice.com)

“A day after the American Petroleum Institute gave oil bulls a cold shower by reporting a 933,000-barrel build in crude oil inventories on top of a gasoline build, the Energy Information Administration deepened the gloom by reporting a 3-million-barrel build for the week to February 23.” Story at…

https://oilprice.com/Energy/Crude-Oil/Oil-Prices-Head-Lower-As-Crude-Gasoline-Inventories-Rise.html

 

MARKET REPORT / ANALYSIS         

-Wednesday the S&P 500 was down about 1.1% to 2714.

-VIX was up about 7% to 19.85.

-The yield on the 10-year Treasury slipped to 2.862%.

 

SENTIMENT. I measure Sentiment as %-Bulls (Bulls/{bulls+bears}) based on the amounts invested in Rydex/Guggenheim mutual funds. Sentiment has bounced up quickly and is now only slightly below levels seen during the dot.com crash on a standard deviation basis. It is currently at 87%-bulls (as of Tuesday’s close). I really may be sorry I jumped back in. The rising Sentiment is a big worry.

 

The S&P 500 made a low (2649) on high volume after the waterfall drop on 5 Feb. On 8 Feb it fell further on high volume to 2581. Many said that was a successful test and the market action looked like they were right.  I was suspicious that the correction might have more to go, because the 2^nd move down was on slightly higher volume suggesting that selling wasn’t over. When the market moved above the 50-dMA and indicators were improving, I blinked and got back in. Was that the right thing to do?  We don’t know. The last two days have shown a sharply falling Index in the afternoon with weak closes.  That’s a bearish sign and the Pros have been selling hard in late-day trading over the last 10-days. This indicator has gotten more bearish over the past few days.

 

Today, my sum of 17 Indicators slipped from +4 to -2 today. Negative numbers are bearish since this is just a sum of positive and negative indicators. The smoothed version has stalled and is neutral. The Index has fallen below its 50-dMA so now it will have to break above it before we feel more positive. Volume was higher today on the NYSE so fear seems to be picking up again.

 

Worse, one of the more reliable indicators that looked good, new-high/new-low, has turned down.

 

Overall, we’ll just have to watch. IF the Index retraces to the prior low, we’ll should have the information to decide whether the correction is really over. For now, we don’t know. At 50% invested in stocks, I have funds to add to stock holdings if we do a full retracement to the low.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

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.

*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

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). 

 

LONG TERM INDICATOR                                                        

Wednesday, the VIX indicator was negative; Volume, Sentiment and Price were neutral.

 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION

27 February, I increased stock holdings from 40% to 50% with the remainder in a mix of stocks and (mostly short-term) bonds. (A comparable TSP allocation would be 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government securities). This is a conservative retiree position.

Durable Goods Orders …Consumer Confidence … Stock Market Analysis … ETF Trading … Dow 30 Ranking

DURABLE GOODS ORDERS (MarketWatch)

Durable-goods orders plunged 3.7% in January — the biggest decline since last summer — largely because of a sharp drop in contracts for passenger planes that was expected… Stripping out planes and cars, orders fell a much smaller 0.3%.” Story at…

https://www.marketwatch.com/story/durable-goods-orders-sink-37-in-january-and-businesses-trim-investment-again-2018-02-27

 

CONSUMER CONFIDENCE (Bloomberg)

“U.S. consumer confidence jumped to a 17-year high as optimism about employment prospects grew and Americans began seeing additional money in their paychecks from recently enacted tax cuts, data from the New York-based Conference Board showed Tuesday… Confidence index rose to 130.8 (est. 126.5), highest since Nov. 2000…” Story at…

https://www.bloomberg.com/news/articles/2018-02-27/u-s-consumer-confidence-at-17-year-high-as-tax-cuts-take-hold

My take: Confidence hasn’t been this high since YEAR 2000. Seems like there was a little stock market trouble that year.  For those who may have forgotten, that was the year the Stock Market made all-time highs before the dot.com crash that took the S&P 500 down 50%.

 

MARKET REPORT / ANALYSIS         

-Tuesday the S&P 500 was down about 1.3% to 2744.

-VIX was up about 18% to 18.59.

-The yield on the 10-year Treasury rose to 2.898%. (If the yield keeps rising I’ll be sorry I jumped back in.)

 

Of the 45-Issues I track (30 stocks and 15 ETFs) only 2 stocks (Intel and Boeing) were higher on the day. Intel was up 1.6% and that’s huge on a day when the S&P 500 dropped 1.3%. On 23 Jan I wrote, “Intel seems to have gotten past the recent chip design issues and investors have apparently decided to move back into Intel. It’s up nearly 5% in the last 5-days and may be worth another look. Low PE; Decent Dividend. The question mark remains growth, but it did break out from a 3-year plateau and is above that point now. It is still not a momentum play –it’s a value play at this point.” Intel is up 9% since I made the comment.

 

Today, my sum of 17 Indicators slipped from +6 to +4 today. Positive numbers are bullish since this is just a sum of positive and negative indicators. The smoothed version has remains up and is very bullish. The Index remained above its 50-dMA.

 

I reduced stock holdings on 31 Jan with the S&P 500 at 2824. I bumped them up 10% so that I am now 50% invested in stocks as of 27 Feb with the Index at 2744. I was hesitant, but the “correction” was odd on several counts and its severity in such a short time may have been due to the options blow-up and collapse of XIV.  I am not sure its over, but I didn’t have the patience to sit out any longer especially since we were seeing positive signs in the indicators. Even with the positive signs we’ve seen, it is very possible that this rally could still fail and retrace to the prior bottom and I stated why in Friday’s blog. For now, I am cautiously bullish, given the improvements we’ve seen in indicators. New-high/new-low data has been especially bullish and we saw a bit more today.

 

Tuesday was a statistically-significant day. That just means that the price-volume move down exceeded statistical parameters that I track. The stats show that about 60% of the time a statistically significant move down will be followed by an up-day the next day. Bottoms are usually statistically significant so this might be a higher low and correction end. Well see…

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

#1. XLY is the Consumer Discretionary ETF. Charles Schwab just rated the Consumer Discretionary sector as “Market Perform”. They said, “The outlook for American consumer spending appears to us to be solid, with consumer confidence strong, a tight labor market and wages trending higher. However, spending on traditional retail items has been cautious and competition among retailers may limit profitability.” More at…

https://www.schwab.com/resource-center/insights/content/consumer-discretionary-sector

 

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.

*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

TUESDAY MARKET INTERNALS (NYSE DATA)

Market Internals slipped 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). 

 

LONG TERM INDICATOR                                                        

Tuesday, VIX was negative; Volume was positive; Sentiment and Price were neutral.

 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION

Today, 27 February, I increased stock holdings from 40% to 50% with the remainder in a mix of stocks and (mostly short-term) bonds. (A comparable TSP allocation would be 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government securities). This is a conservative retiree position.

Home Sales … Stock Market Analysis … ETF Trading … Dow 30 Ranking

HOME SALES (Reuters)

“Sales of new U.S. single-family homes fell for a second straight month in January, weighed down by steep declines in the Northeast and South, which could raise concerns the housing market is losing momentum.” Story at…

https://www.reuters.com/article/us-usa-economy/u-s-new-home-sales-hit-5-month-low-supply-highest-since-2009-idUSKCN1GA1X9

 

MARKET REPORT / ANALYSIS         

-Monday the S&P 500 was up about 1.2% to 2780.

-VIX was DOWN about 4% to 15.80.

-The yield on the 10-year Treasury was little changed at 2.864%.

 

This correction has been recovering so fast that not all of the troubling signs we noted at the end of January have been fixed.  What do I mean? Let’s list a few: (1) The S&P 500 is now 8.8% above the 200-dMA.  (Tops often occur in the 10-15% range.) (2) Breadth (advance-decline line) vs. the S&P 500 shows that the Index has been rising faster than the # of advancing stocks. (This is also close to giving a warning sign.)   (3) Smart money (late-day-action) is still headed down over the last 10-days. (4) Breadth (the % of stocks advancing over the last 10-days) is overbought at 61%. In 2010, the correction started with breadth at 60%. (5) New-highs are still falling on a longer-term basis. This is all concerning, but there have been bullish signs too. I noted a few yesterday. Here are more…

 

Today, my sum of 17 Indicators increased from +4 to +6 today. Positive numbers are bullish since this is just a sum of positive and negative indicators. The smoothed version has turned up and is very bullish. The Index broke above its 50-dMA and has remained above the 50-dMA for two days. Market Internals are positive today, a bullish indication.

 

I reduced stock holdings on 31 Jan at S&P 500 2824. The Index has retraced 68% of its loss since then. That’s above the 61.8% Fibonacci Retracement. Another 3% increase in the S&P 500 and I’ll have a round-trip.

 

It is very possible that this rally could still fail and retrace to the prior bottom. The retest we saw on 8 Feb was at a higher volume than the prior 5 Feb low. To me that suggests that selling wasn’t done – yet here we are still rapidly climbing. I am holding my nose to buy. (Mr. Market doesn’t always pay attention to my indicators.)

 

As noted in yesterday’s blog, I’ll be buying stocks. I plan to raise my investment in stocks to 50% of my total portfolio. For me that is fully invested. The trick is to be nimble and recognize this market could still go south.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

XLY is the Consumer Discretionary ETF. Charles Schwab just rated the Consumer Discretionary sector as “Market Perform”. They said, “The outlook for American consumer spending appears to us to be solid, with consumer confidence strong, a tight labor market and wages trending higher. However, spending on traditional retail items has been cautious and competition among retailers may limit profitability.” More at…

https://www.schwab.com/resource-center/insights/content/consumer-discretionary-sector

 

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.

*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

MONDAY MARKET INTERNALS (NYSE DATA)

Market Internals improved to 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). 

 

LONG TERM INDICATOR                                                        

Monday, VIX was negative; Volume was positive; Sentiment and Price were neutral.

 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION

I plan to increase stock holdings to 50%. (A comparable TSP allocation would be 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government securities). This is a conservative retiree position.

Deficits Do Matter … Stock Market Analysis … ETF Trading … Dow 30 Ranking

DEFICITS DO MATTER (Real Investment Advice)

“Just because we were easily able to fund deficits of years past does not mean we should be so naïve as to think it will be easy going forward. As described above, the circumstances we face today are far more challenging than those of past years. The confluence of these events argues that investors should prepare for a new paradigm and not get caught flatfooted trusting in outdated narratives.” Commentary at…

https://realinvestmentadvice.com/deficits-do-matter/

My cmt: In the commentary, Michael Lebowitz, CFA, explains why the forces of Supply and Demand may not support financing the debt.

 

MARKET REPORT / ANALYSIS         

-Friday the S&P 500 was up about 1.6% to 2747.

-VIX was DOWN about 12% to 16.49.

-The yield on the 10-year Treasury slipped to 2.866%.

 

Line in the Sand.

The Bulls were out in force Friday as panicked buyers were afraid of being left at the station since the S&P 500 has been rising rapidly from its 8 Feb bottom. The move made Friday a statistically-significant day. That just means that the price-volume move up exceeded statistical parameters that I track. The stats show that about 60% of the time a statistically significant move up will be followed by a down-day the next day.

 

More importantly, most tops are statistically-significant.  That doesn’t guarantee that Friday was a top, but the Index is close to the upper Fibonacci retracement point and many believe this would be a top based solely on the Fibonacci retracement. Further, so far, we have been following the correction scenario that includes an area of trouble followed a waterfall drop (its over – we think); a bounce; and then a retracement. To me, data suggests that the Bounce is over and we go down from here; but there is evidence to suggest the Index simply keeps going up...

 

…The Index broke above the 50-dMA Friday; there have been 3 days after the bottom with fairly high up-volume (80%); VIX is half what it was at the bottom; there are probably more signs, but I am not convinced.  In my book, a reversal is indicated by up-days with extreme up-volume (90%) or back-to-back 80% up-volume days and we did not see that.

 

Bottom line: The line in the sand is where we closed Friday - 2747.  If we go up from here, I’ll be a buyer of stocks. Otherwise, I’ll watch for a retest of the 2581 low.

 

TODAY’S RANKING OF  15 ETFs (Ranked Daily)

In corrections this chart may be less valuable – all stocks are falling.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)

In corrections this chart may be less valuable – all stocks are falling.

 

The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.

*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

FRIDAY 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). 

 

LONG TERM INDICATOR                                                        

Friday, VIX was negative; Volume was positive; Sentiment and Price were neutral.

 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION

I remain 40% invested in stocks and 60% in cash/bonds as of 31 Jan (A comparable TSP allocation would be 40% in the S&P 500 Index fund (C-Fund) with the remainder 60% G-Fund (Government securities).

Jobless Claims … Leading Economic Indicators (LEI)… Crude Inventories … Challenging the Electoral College … Stock Market Analysis … ETF Trading … Dow 30 Ranking

JOBLESS CLAIMS (Reuters)

“The number of Americans filing for unemployment benefits fell to a near 45-year low last week, pointing to strong job growth in February and solid momentum in the economy…Initial claims for state unemployment benefits dropped 7,000 to a seasonally adjusted 222,000 for the week ended Feb. 17…” Story at…

https://www.reuters.com/article/us-usa-economy/u-s-jobless-claims-near-45-year-low-as-economic-outlook-brightens-idUSKCN1G61OX

 

LEI (CNBC/Reuters)

“A key index tracking 10 economic metrics rose for the third straight month in January. The composite indicator increased 1 percent in January from the prior month, besting expectations of 0.7 percent from a survey of Reuters economists.” Story at…

https://www.cnbc.com/2018/02/22/january-leading-indicators-index.html

 

CRUDE INVENTORIES (OilPricecom)

“After a surprise crude oil inventory draw reported by the American Petroleum Institute, the Energy Information Administration strengthened the good mood by confirming the draw, and a much larger one than API’s 907,000 barrels. The authority reported inventories had fallen by 1.6 million barrels in the week to February 16.” Story at…

https://oilprice.com/Energy/Crude-Oil/Oil-Prices-Rise-After-EIA-Reports-Crude-Draw.html

 

LAWSUITS CHALLENGE THE ELECTORAL SYSTEM (msn.com)

“A coalition that includes a Latino membership organization and a former Massachusetts governor filed lawsuits on Wednesday challenging how four U.S. states allocate their Electoral College votes in presidential elections… The lawsuits were filed in federal courts in Massachusetts and California…Critics complain that the Electoral College system allows a candidate to win a presidential election despite losing the nationwide popular vote.” Story at…

https://www.msn.com/en-us/news/us/lawsuits-challenge-electoral-college-system-in-four-us-states/ar-BBJqDw4?li=BBmkt5R&ocid=spartandhp

My cmt: The Founding Fathers were careful to establish the Electoral college specifically to prevent electing a President by popular vote. The point of the Electoral College was to prevent large states from ignoring small states. It forces the Executive Branch to pay attention to the smaller states by requiring a President to win a majority of STATES; not a majority of VOTERS – doesn’t anyone read history anymore? (In a similar manner, every state gets two Senators and that limits the power of large states in the Legislative Branch.) If the Courts rule in favor of the Plaintiffs, the change to the US will be stunning.

 

MARKET REPORT / ANALYSIS         

-Thursday the S&P 500 was up about 0.1% to 2704.

-VIX was DOWN about 6% to 18.72.

-The yield on the 10-year Treasury was little changed at 2.920%.

 

52-week new-lows again exceeded new-highs highs today.  That’s a bearish indication. Overall, market internals deteriorated, but were neutral for the day.  

 

Today was somewhat of a repeat of yesterday. The S&P 500 peaked at Noon and dropped more than 1% all afternoon, a bearish sign. Closing Tick (sum of last trades of the day) was a bullish +161, so it’s a mixed bag on today’s market action. Overall, I’d have to say today was a bearish sign; the markets have not been able to hang on to gains.

 

The S&P 500 remains down 5.9% from its recent high; this is day 19 in the correction. If the bottom was 8 Feb (the recent low), then this “correction” lasted 10-days top to bottom.  A 2-week correction is awfully short and difficult to believe. The average correction lasts about 50-days.

 

My sum of 17 Indicators dropped from +3 to -2 today – a bearish sign on the day. The smoothed version has turned up and is bullish. At this point the chart and 50-dMA is more important than the indicators.

 

We still can’t guess whether there will be a retest of the low or not. A typical correction includes a waterfall collapse (it seems to be over) followed by a bounce (we got the bounce), a lot of choppiness and then a retest of the low over a period of about 50-trading days. We’ll see. It is all up to the chart. Friday the S&P 500 was sitting slightly (0.3%) above 50-dMA; now it’s 0.9% below it.  The 50-dMA is a critical point for the Index. If we can break significantly above the 50-dMA and stay there for a few days it would suggest this correction is more likely to end quickly.

 

The market was down 1.7% when I suggested that I was reducing stock exposure to 40% based on numerous negative indicators. It remains to be seen whether I’ll make money on that call. I am positioned for a retest of the correction low. If it turns out to be a successful retest, I’ll be back in stronger than before.

 

TODAY’S RANKING OF  15 ETFs (Ranked Daily)

In corrections this chart may be less valuable – all stocks are falling.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)

In corrections this chart may be less valuable – all stocks are falling.

 

The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.

*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

THURSDAY MARKET INTERNALS (NYSE DATA)

Market Internals deteriorated, but 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). 

 

LONG TERM INDICATOR                                                        

Thursday, VIX was negative; Volume, Sentiment and Price were neutral.

 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION

I remain 40% invested in stocks and 60% in cash/bonds as of 31 Jan (A comparable TSP allocation would be 40% in the S&P 500 Index fund (C-Fund) with the remainder 60% G-Fund (Government securities).

FOMC Minutes … Existing Home Sales … Stock Market Analysis … ETF Trading … Dow 30 Ranking

FOMC MINUTES (Bloomberg)

“U.S. central bankers sent a strong message Wednesday that an expansion with “substantial underlying economic momentum” could sustain additional increases in interest rates this year. Federal Reserve officials “anticipated that the rate of economic growth in 2018 would exceed their estimates of its sustainable longer-run pace and that labor market conditions would strengthen further,” the minutes of their Jan. 30-31 meeting released in Washington on Wednesday showed.” Story at…

https://www.bloomberg.com/news/articles/2018-02-21/fed-minutes-show-confidence-improving-on-growth-price-outlook

 

HOME SALES (USA Today)

“U.S. sales of existing homes fell in January from a year earlier by the most in more than three years. Would-be buyers were stymied by rising prices and a shortage of homes for sale. The National Association of Realtors said Wednesday that sales dropped 3.2% from December to January…” Story at…

https://www.usatoday.com/story/money/personalfinance/real-estate/2018/02/21/u-s-home-sales-fall-3-2-january-2nd-straight-drop/358517002/

 

MARKET REPORT / ANALYSIS         

-Wednesday the S&P 500 was down about 0.6% to 2701. (The market started falling as soon as the FOMC minutes were released.)

-VIX was DOWN about 3% to 20.02.

-The yield on the 10-year Treasury rose to 2.949%. (This doesn’t look good.)

 

What an ugly close! The S&P 500 dropped more than 1% after the FOMC minutes were released at 2PM. They continued down into the close. Closing Tick (sum of the last trades of the day) was a bearish -488.

 

Yields have been rising since September. This isn’t good for the markets. Sounds like an understatement, right? It is obvious, but I point it out as further evidence that this correction may not end next week as many bulls think.

 

Sentiment (measured as %-Bulls (Bulls/{bulls+bears}) based on the amounts invested in Rydex/Guggenheim mutual funds) was 68% last Thursday. Tuesday it was 86%-bulls. As it climbs higher, a return to recent lows becomes more likely.

 

The S&P 500 remains down 6% from its recent high; this is day 18 in the correction. If the bottom was 8 Feb (the recent low), then this “correction” lasted 10-days top to bottom.  A 2-week correction is awfully short and difficult to believe.

 

My sum of 17 Indicators dropped from +6 to +3 today – a bearish indication. The smoothed version has turned up and is bullish. I’d be surprised if Indicators weren’t turning more positive after the 5% bull-move we’ve had recently. At this point the chart and 50-dMA is more important than the indicators.

 

We still can’t guess whether there will be a retest of the low or not. A typical correction includes a waterfall collapse (it seems to be over) followed by a bounce (we got the bounce), a lot of choppiness and then a retest of the low over a period of about 50-trading days. We’ll see. It is all up to the chart. Friday the S&P 500 was sitting slightly (0.3%) above 50-dMA; now it’s 1% below it.  The 50-dMA is a critical point for the Index. If we can break significantly above the 50-dMA and stay there for a few days it would suggest this correction is more likely to end quickly.

 

The market was down 1.7% when I suggested that I was reducing stock exposure to 40% based on numerous negative indicators. It remains to be seen whether I’ll make money on that call. I am positioned for a retest of the correction low. If it turns out to be a successful retest, I’ll be back in stronger than before.

 

TODAY’S RANKING OF  15 ETFs (Ranked Daily)

In corrections this chart may be less valuable – all stocks are falling.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)

In corrections this chart may be less valuable – all stocks are falling.

 

The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.

*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

WEDNESDAY MARKET INTERNALS (NYSE DATA)

Market Internals declined 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). 

 

LONG TERM INDICATOR                                                        

Wednesday, VIX was negative; Volume, Sentiment and Price were neutral.

 

MY INVESTED STOCK POSITION:

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION

I remain 40% invested in stocks and 60% in cash as of 31 Jan (A comparable TSP allocation would be 40% in the S&P 500 Index fund (C-Fund) with the remainder 60% G-Fund (Government securities). For non-Government employees holding short-term bonds would be OK rather than 60% cash.