“To date, 81% of the companies in the S&P 500 have
reported actual results for Q1 2018. In terms of earnings, more companies are
reporting actual EPS above estimates (78%) compared to the five-year average.
If 78% is the final percentage for the quarter, it will mark the highest percentage
of S&P 500 companies reporting actual EPS above estimates since FactSet
began tracking this metric in Q3 2008... Looking
at future quarters, analysts currently project earnings growth to continue at
double-digit levels through 2018.” Analysis at…
MUELLER OVERREACH (ZeroHedge)
“…it's looking increasingly likely that Manafort [former
Trump campaign chairman Paul Manafort] could escape his charges - and be
free of his ankle bracelets - because in a surprising rebuke of Mueller's
"overreach", Eastern District of Virginia Judge T.S. Ellis, a Reagan
appointee, said Mueller shouldn't have "unfettered power" to prosecute over
charges that have nothing to do with collusion between the Trump campaign and
the Russians… "I don’t see how this indictment has anything to do
with anything the special prosecutor is authorized to investigate," Ellis
said at a hearing in federal court in Alexandria, Virginia, concerning a motion
by Manafort to dismiss the case… The judge also questioned why Manafort’s case
there could not be handled by the U.S. attorney’s office in Virginia, rather
than the special counsel’s office, as it is not Russia-related.” Story at…
My cmt: I suspect the stock market is somewhat troubled
by impeachment prospects so if the Judge does dismiss this case it should help
markets. I don’t know if the markets like Trump; they just don’t like
uncertainty.
HUSSMAN SHAREHOLDER LETTER – EXCERPT (Hussman Funds)
“Based on the valuation measures we find most strongly
correlated with actual subsequent market returns across a century of market
history, I presently expect the S&P 500 Index to lose nearly two-thirds of
its value over the completion of the current market cycle…However, valuations
are almost entirely useless in gauging investment prospects over shorter
segments of the market cycle. This makes sense, because if overvaluation was
enough to stop prices from advancing further, market valuations could never
have established the breathtaking extremes that they reached in 1929, 2000, and
again today…Recall that the S&P 500 registered negative total returns for a
buy-and-hold strategy during the nearly 12-year period from March 2000 until
November 2011. I expect a similar consequence to emerge from current extremes.”
John Hussman, PhD. Commentary at…
My cmt: John Hussman is calling for a crash, but not
necessarily right now. When I look at the data, I really can’t say that the top
is in and a crash cycle has started. It could be, but I don’t think so based on
the evidence so far.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.4% to 2673.
-VIX dropped about 0.1% to 14.75.
-The yield on the 10-year Treasury was little changed at
2.952%.
We didn’t get the big up-day I had hoped for that would
confirm that the correction is over. Oh well…we’ll keep waiting and watching,
but data does continue to improve and the day was positive so we can’t complain
too much.
My daily sum of 17 Indicators rose from +1 to +3; the
10-day smoothed version improved from -45 to -41. The basket of Market Internals I track remained
Positive on the markets.
Here’s a rundown of some indicators:
Money Trend is positive. Smart Money (late-day trading)
is neutral. NYSE Breadth is improving faster than the S&P 500 index and
that’s bullish. The Industrial cyclical ETF (XLI) turned up today; over the
last 10-days it’s now outperforming the S&P 500 – that’s bullish. New-high/new-low
data is improving. Bollinger Bands and RS are neutral. Not too many indicators
are Bearish. Most are bullish or neutral.
The Index rose above the 50-day moving average (50-dMA) mid-day
but closed below the 50-day. Lets’ see if it can hold above it Tuesday.
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. Breadth
is improving
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…
MONDAY 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.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Monday, the Volume, VIX, Price and Sentiment indicators were
neutral. Overall this is a NEUTRAL indication.
