“Federal Reserve officials left interest rates unchanged,
acknowledging inflation is close to target without indicating any intention to
veer from their gradual tightening of monetary policy.” Story at…
ADP EMPLOYMENT (USA Today)
“U.S. job growth may have bounced back in April,
according to a private report.
ADP, the large payroll processor, said Wednesday that
businesses added 204,000 jobs last month, possibly signaling the government’s
employment report this week will reveal a rebound in hiring after a weak
showing the prior month.” Story at…
CRUDE OIL INVENTORIES (OilPrice.com)
"After yesterday the American Petroleum Institute served a
not so pleasant surprise to oil bulls by reporting a 3.43-million-barrelincrease
in crude oil inventories in the United States, the Energy Information
Administration confirmed the bad news, estimating a
6.2-million-barrel increase in U.S. oil inventories for the week to April 27.”
Story at…
CRESTMONT VALUATION (Advisor Perspectives)
“Based on the April S&P 500 average of daily closes, the
Crestmont P/E is 121% above its arithmetic mean and at the 99th percentile of
this fourteen-plus-decade monthly metric.” – Jill Mislinski.
Chart and analysis at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dropped about 0.7% to 2636.
-VIX rose about 3% to 15.97.
-The yield on the 10-year Treasury was up slightly to 2.971%.
I mentioned divergence yesterday between the major
indices. Today the outlier was the Russell 2000. This small cap Index was up 0.29% while the Dow
and S&P 500 were down 0.71%.
JEFFERY SAUT COMMENTARY (Raymond James)
I’ve been writing about the symmetrical wedge pattern
recently (For a chart diagram see the Market Report in the Blog post at…
http://navigatethestockmarket.blogspot.com/2018/04/gdp-michigan-sentiment-intel-soars.html).
Here’s what Jeffrey Saut at Raymond James had to say recently about the current
chart pattern…
“Looking at the chart of the SPX shows a wedge chart
formation, with the SPX bonking up against the downtrend line three times…Typically
on the fourth attempt the SPX usually breaks above said downtrend line. Verily,
there is nothing in the charts suggesting this is anything more than a normal
retracement consolidation chart pattern.” – Jeffery Saut.
Unfortunately, we didn’t bounce up. Today, Wednesday, the
Index broke down thru the lower trend line of the symmetrical wedge pattern we
have been watching.
As previously noted, the break won’t be confirmed until
there are successive closes below the lower trendline (shown in blue). If it is
confirmed, it will show that the short-term pattern is not up as we had hoped
but continues down.
Negative signs from the indicators continue. My daily sum
of 17 Indicators remained -9; the 10-day smoothed version dropped from -24 to -41. With all of the negative indicators and a
chart breakdown, it looks like the S&P 500 is going to retest its prior low
in the 2581 region.
The Industrial Cyclical ETF (XLI) is diverging from the
S&P 500 as it is now underperforming the S&P on all timeframes. This is
a very bearish sign since in times of market turmoil cyclicals are the first to
fall. It doesn’t necessarily indicate a big decline, but it does suggest a
decline.
My plan ahead remains: If the S&P 500 drops to its
prior low of 2581 and there is an unsuccessful retest, I will probably cut
stock holdings again. If we see a successful test I’ll be adding to stocks.
MOMENTUM ANALYSIS IS STILL QUESTIONABLE. As one can see
below in both momentum charts, there are still a lot of issues in negative
territory, i.e., they have weak upward momentum. That’s just an indication that
the market is in correction mode and most stocks have been headed down.
Momentum has gotten worse in the last week or so.
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 has 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 remained
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).
18 Apr 2018 I
increased stock investments from 35% to 50% based on the Intermediate/Long-Term
Indicator that turned positive on the 17th. For me, fully invested is a
balanced 50% stock portfolio. This is not the time to take extra risk, so
you may want to have less invested in stocks than normal. 50% is my minimum
unless I am in full defense mode.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Wednesday, the Volume indicator is negative; VIX, Price and
Sentiment indicators were neutral. Overall this is a NEUTRAL indication.
