-Thursday the S&P 500 was Up about 1.4% to 2641.
-VIX was Down about 13% to 19.97.
-The yield on the 10-year Treasury slipped to 2.742%.
(Investors were buying bonds driving yields down. Hard to say what this might
mean for stocks.)
Correction Update:
Thursday was trading-day 44 since the prior top. The
S&P 500 was 8.1% below the top and 2.3% above the prior correction
bottom. On average, corrections >10%
last 68-days…<10% last 32-days. Day-40 was the recent retest for the DJI and
the NYSE Composite.
Today was a pre-Holiday trading day which tends to be positive
with lower volume. Exchanges were closed Friday. Volume Friday was about
average for the month which for a holiday is unusually high. The last day of
the month is usually strong along with the first couple of days in the next
month. There was also a lot of position shifting by Fund Managers since it was
the last day of the quarter. All of those may have contributed to the strong up
day. On the other hand, perhaps investors are getting over the correction.
Both the DOW 30 and the 15 ETFs I track have been
improving. 5-days ago when the S&P 500 came within 0.3% of a retest of the
prior low, zero stocks in the Dow 30 were up on the day and only 1 of the ETFs
was up. Today every ETF was up and 25 of the 30 Dow stocks were up. Intel was
up 5%. These are bullish signs.
Generally, indicators are improving too:
-My daily sum of 17 Indicators improved from -4 to +3;
that’s a nice turn-around. The 10-day smoothed version remained flat at -43.
-Money Trend is turning up.
-Smart Money (based on late day action) is basically flat
to slightly down.
-The cyclical industrials are trying to reverse upward
compared to the S&P 500. If it
continues that would be a bullish sign.
-Market Internals remained Neutral, but generally
improved.
My analysis is based on the S&P 500. The S&P 500 almost tested the prior low
on 23 March when it was 2588. That’s
only 0.3% higher than the low of 2581 on 8 February. Interestingly, the NYSE
Composite did make a lower low on 23 March and it was about 0.8% lower than the
prior low. The DOW 30 also made a lower low. We prefer a test based on the
S&P 500 since S&P 500 stocks are stronger and more conservative, but
since it was very close to a retest and the Composite did retest successfully,
I think we should consider leaning to the bullish side and adding to stock
holdings next week if it looks right.
81% of all volume was up-volume in Thursday. That’s a bullish sign. Given the high up
volume and my other somewhat bullish signs, I’ll be watching Monday’s action
and further into next week for clues on changing from defensive position to an
outright BUY.
Basically, I will add to stock holdings if we see strong
buying next week. If it looks weak, I’ll just wait and see if a better entry
point shows up.
Right now, the key is Monday. If we see another very strong day the
correction is probably over. We’ll see,
MOMENTUM ANALYSIS IS NOW NEARLY WORTHLESS. As one can see
below in both momentum charts, most of the issues I track are now in negative
territory, i.e., few have any upward momentum. That’s just an indication that
the market is in correction mode and most stocks have been headed down.
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.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
improved and 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).
INTERMEDIATE / LONG-TERM INDICATOR
We
may get a BUY signal this week so stay tuned.
21 March, I cut
stock holdings from 50% to 35% with the remainder in a mix of stocks and
(mostly short-term) bonds. I previously reduced stock exposure on 31 Jan.
Intermediate/Long-Term
Model: Thursday, Price was positive; the VIX and Volume indicators were
negative; and Sentiment was neutral.
