“Payroll processor ADP said Wednesday that businesses
added 178,000 jobs last month, possibly reflecting at least a modest
pickup in hiring in the government’s employment report this week but also the
growing impact of worker shortages.” Story at…
GDP (Reuters)
“U.S. economic growth slowed slightly more than initially
thought in the first quarter amid downward revisions to inventory investment
and consumer spending, but a robust labor market and income tax cuts are likely
to boost activity this year.” Story at…
FED BEIGE BOOK (MarketWatch)
“The Federal Reserve said the U.S. grew “moderately” from
late April to early May in its latest evaluation of the economy, indicating the central bank
remains firmly on track to raise interest rates next month…In every region of
the country, Fed officials characterized the economy as performing well.” Story
at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 1.3% to 2724.
-VIX fell about 12% to 15.02.
-The yield on the 10-year Treasury rose to 2.841%
Like yesterday, Wednesday was a statistically-significant
day, but it was up. That just means that the price-volume move up exceeded
statistical parameters that I track. Again, the stats show that about 60% of
the time a statistically significant move up will be followed by a down-day the
next day. A pattern of up and down big moves in succession sometimes indicates
a top as investors are confused about where the markets are headed. None of my
topping indicators are suggesting a top, so it is more likely that that Tuesday
was a good buying point. We do tend to see a preponderance of statistically-significant
days at bottoms too; that happens when investors decide as one to buy after a
bottom. I think we’re in “bottom mode” and we’ll continue up from here though
not in a straight line. New-highs are still likely.
There’s a lot of potential news that could shake up the
markets (Trump, Italian Political Crisis, Higher Interest rates, the FED). All we can do is follow the
market and react if bad news does show up. For now, we remain bullish.
My daily sum of 17 Indicators bounced from -2 to +5,
while the 10-day smoothed version climbed from +21 to +22. Conditions improved
a lot today. The chart, up-volume, breadth, new-high/new-low data, XLI-SPY
spread and my collection of market internals all made significant improvements.
My longer-term indicator system remains bullish.
MOMENTUM ANALYSIS:
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. (On 5 Apr 2018 I
corrected a coding/graphing error that had consistently shown Nike
incorrectly.)
*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 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).
18 Apr 2018 I
increased stock investments from 35% to 50% based on the Intermediate/Long-Term
Indicator that turned positive on the 17th. (It has since turned Neutral.) For
me, fully invested is a balanced 50% stock portfolio. 50% is my minimum unless
I am in full defense mode.
On 10 May 2018 I
added stock positions to increase Stock investments to 58% based on more
evidence that the correction is over. I’ll sell these new positions quickly if
the market turns down.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Wednesday, the Price and VIX Indicators were positive; Volume and
Sentiment indicators were neutral. Overall this is a BULLISH indication.
