“While overall sentiment was unchanged, there was some
movement within the Michigan index. Consumers’ views of the current situation
slipped 1.6 points, while the expectations component gained 1.1 points. More
important was an uptick in coming-year inflation expectations…” Story at…
50-YEARS OF MIDDLE CLASS WAGES (Advisor Perspectives)
“If we multiply the hypothetical weekly earnings by 50,
we get an annual figure of $38,042. That's a 12.6% decline from the similarly
calculated real peak in October 1972. In the charts above, we've highlighted
the presidencies during this timeframe. Our purpose is not necessarily to
suggest political responsibility, but rather to offer some food for thought. We
will point out that the so-called supply-side
economics popularized during the Reagan administration (aka
"trickle-down" economics), wasn't very friendly to production and
nonsupervisory employees.” – Jill Mislinsky. Commentary and charts at…
My cmt: It would seem logical that the reason for the
decline is partly due to the loss of high paying manufacturing jobs. Honda began
importing cars to the US in 1970. Interestingly, the North American Free trade
Agreement (NAFTA) was passed during the Clinton years, at the bottom of the weekly
earnings decline indicated on the above chart. NAFTA might have affected the number of jobs; it doesn't seem to have impacted wages, at least based on this chart.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.2% to 2728.
-VIX dropped about 4% to 12.65.
-The yield on the 10-year Treasury was up a bit to 2.970%.
Today’s report will be fairly similar to Thursday’s. Not
much has changed.
My daily sum of 17 Indicators remained +5, while the
10-day smoothed version improved from -11 to -8.
The basket of Market Internals I track remained Positive
on the markets.
The overbought-oversold ratio, sometimes called the
advance-decline ratio, is once again indicating “overbought” today. This
indicator is usually early so I’ll ignore it for now.
The Bollinger Band indicator improved. The Index is close
to its upper Bollinger Bands, but not “overbought” today. The 2x-std deviation
limit of the upper Bollinger Band moved up more than the S&P 500 index. This
indicator needs to work with RSI and RSI is not currently overbought. Further, even
if it were overbought, overbought conditions can remain for a considerable time
after the end of a correction as the market powers up.
The Index remained above its 100-day moving average
(100-dMA) today for the 2nd day in a row. 2-successive closes above
the moving average (in this case) is usually considered confirmation of a trend
change – now it looks like it is up.
Closing Tick (sum of the final trades of the day) was a
bullish +411. Combined with today’s up-day, that should bring another positive
day Monday.
The DOW 30 is giving a bullish sign because on a 10-dMA basis,
53% of the DOW stocks have been up. This isn’t a great indicator, because it
tends to bounce up and down with the DOW itself, but a number above 50% is good.
57% of the ETFs I track were up over the last 10-days and that’s bullish too.
If I am wrong, 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. At this point though, I think the correction is over. We’ll see…
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, conditions were more
positive. 100% of the ETFs were up – it has been a month since we saw all the
ETF’s up on a day.
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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained 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.
I added stock
positions to increase Stock investments to 55% 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: Friday, the VIX, Volume, Price and Sentiment indicators were
neutral. Overall this is a NEUTRAL indication.
