“Optimism among small companies in the U.S. rose more
than forecast in January, fueled by a record number of owners who said now was
a good time to expand, according to a National Federation of Independent
Business survey released Tuesday…Six of the 10 components that make up the
small-business optimism index increased in January, producing one of the
strongest readings in the 45-year history of the survey.” Story at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 0.3% to 2663.
-VIX was down about 3% to 24.97.
-The yield on the 10-year Treasury slipped to 2.829%.
The S&P 500 is down 7.3% from its recent high; this
is day 13 in the correction. If the bottom was 8 Feb, 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 improved from -8 to -2 today. (A
“-” number means that most indicators are bearish.) The 10-day versions of this
indicator (designed to avoid the daily fluctuation) turned up and that’s a bullish
sign.
BULL SIGNS
-New-high/new-low data is finally bullish and signaled a
buy for this one indicator. (This is a good indicator.)
-Advancing-volume has been improving since the day before
the 8 Feb low and improved today as well.
-The 10-dMA of Closing Tick is -132. A negative print is
believed by some to be in the zone where bottoms are formed.
-RSI remains very close to a buy signal. It was a buy on
the 8th and 9th of Feb.
-My long-term indicator improved to Hold.
NEUTRAL SIGNS
-Money Trend is still falling, but it is now looking like
a turn to the upside is imminent and that would be bullish. (This indicator
attempts to follow the general concept of Lowry Research and their supply
and demand methodology for stock market analysis. Their concept is based on a
detailed stock-by-stock analysis while mine is an estimate based on readily
available Macro data. Theirs is much
more accurate, but that doesn’t mean mine isn’t useful.) It is most
useful when it turns up after a market decline to confirm the up-move or suggest
an impending up turn.
BEAR SIGNS
-Sentiment is still at very high levels, but it a bit
less bullish, now at 81%-Bulls on the day.
-Only 44% of stocks on the NYSE have advanced over the
last 10-days.
-Late day action is down over the last month and still
suggests the Pros are cautious.
-The S&P 500 is still too far ahead of Market
Internals.
-If the correction has bottomed already (on 8 Feb) then
it was only 10-days long. The average is 53-days.
We didn’t see the strong up-day Tuesday with high
up-volume, to convincingly determine the correction is over based on an established
indicator. My new-high/new-low analysis does suggest this correction is over.
It bothers me though. There have been many causes blamed for the start of the
downturn: rising interest rates; inflation fears; FED unwinding of QE (causing
rising interest rates); FED hiking of the Federal Funds Rate; dollar weakening,
bullish sentiment; overvaluation (the median PE is higher than during the
dot.com era); you name it. None of those
issues have gone away. It seems to me that it should take more than 10-days to
wash away those fears.
Let’s see if there is a retest of the recent low – then we
should have a better idea where this market is going. It will probably go
higher first.
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…
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…
TUESDAY 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
Tuesday,
Sentiment, Volume and VIX Indicators were negative; Price remained neutral;
New-High/New-low data is positive.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40%
invested in stocks and 60% in cash as of 31 Jan or 50% in the S&P 500 Index
fund (C-Fund) with the remainder 50% G-Fund (Government securities). For none
Government employees holding short-term bonds would be OK rather than 60% cash.
