“Federal Reserve officials gave no indication that they
are likely to speed up their pace of interest rate increases during their most
recent two-day meeting, suggesting instead that they would be willing to allow
the inflation rate to rise slightly above 2 percent for a “temporary period,”
while the economy continues to expand.” Story at…
My cmt: The market apparently liked the report because
the market improved from the release of the Fed minutes thru the end of the
trading session.
NEW HOME SALES (Reuters)
“Sales of new U.S. single-family homes fell less than
expected in April amid a rise in transactions in the South and Northeast, and
data for the prior three months was revised lower, suggesting the housing
market was struggling to regain momentum.” Story at…
My cmt: Home sales are watched closely since some think
they are a good predictor of recession.
CRUDE INVENTORIES (OilPrice.com)
“As crude oil begins to slide back down on talk about a
possible easing of the OPEC+ production cuts, the Energy Information
Administration added to bearish sentiment by reporting a hefty
build in crude oil inventories of 5.8 million barrels for the week ending May
18.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 0.3% to 2733.
-VIX dropped about 5% to 12.58.
-The yield on the 10-year Treasury slipped to 2.986%.
It was an odd day. The price action was pretty good after
the FED released its minutes, but Market Internals were weak at the close.
Declining volume exceeded advancing volume and, in a big, negative surprise, 52-week lows
outpaced 52-week highs for the day. With weak internals it should come as no
surprise to see my indicators weak as well.
My daily sum of 17 Indicators slipped from +3 to -1,
while the 10-day smoothed version slipped from +49 to +42. It’s still bullish,
but the trend is turning down. My first impression today was to conclude that
the market action was all about the FED and we would have clear sailing at
least for a while since the S&P 500 improved after the FED minutes. Today’s
internals suggest the market may still have other issues to digest and that
view is also supported by the futures that are down as I write this.
I’m guarded in the near term. We need to see the market
hold the 2700 area; then I’ll feel more bullish. My longer-term indicators are
bullish; the near term is an issue. We’ll have to wait to see how it resolves.
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 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 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).
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,
but I don’t completely trust VIX at this point.
