“U.S. consumer spending increased more than expected in
April. The data were a further sign that economic growth was regaining momentum
early in the second quarter, while inflation continued to rise steadily.” Story
at…
PCE PRICES (Reuters)
“U.S. consumer prices accelerated in the year to May,
with a measure of underlying inflation hitting the Federal Reserve’s 2 percent
target for the first time in six years.” Story at…
CHICAGO PMI (fxStreet)
“The MNI Chicago Business Barometer rose 1.4 points to
64.1 in June, up from 62.7 in May, hitting the highest level since January…”
Story at…
CONSUMER SENTIMENT (Bloomberg)
“Consumer sentiment weakened in the latter part of June
on concerns about the economic impact of a trade war, according to a University
of Michigan survey on Friday that also showed a pickup in inflation
expectations.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.6% to 2716.
-VIX dipped about 5% to 16.09.
-The yield on the 10-year Treasury rose to 2.860%.
What an ugly close today. The S&P 500 index dropped
nearly 1% in the last hour or so and the closing Tick (sum of last trades of
the day) was high at -420.
There was a silver lining in the data though. The 10-day
closing Tick was minus 23. Minus numbers
are where bottoms are made since it really is indicative of too many bad days.
As is often the case in stock market analysis, too much of a bad thing can be
good. In this case, 10-day, closing-tick
in minus territory is somewhat bullish, especially given some of the other
indicators.
My daily sum of 17 Indicators improved from -7 to -3,
while the 10-day smoothed version dropped from -57 to -58. The 10-day version continues
to slow its decline. The indicators are neutral at this point.
The Bollinger Band indicator was very close to oversold
and RSI (14-d,SMA) was 30 and that is oversold. Combine those oversold signals
with the Advance/Decline ratio that was oversold a few days ago and we have a
decent bullish set-up.
The % of stocks advancing is improving faster than the
S&P 500 and that’s a bullish sign too.
The charts need to confirm these bullish signs, but so
far they haven’t, at least not convincingly. The S&P 500 remains at the 50-dMA today so we’ll have to
wait longer to see where the market is headed. Indicators are beginning to
suggest up, but the signal is not very strong – we’d like to have more
confirmation.
My longer-term indicator system remained neutral. I
remain cautiously 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…
I still have GE in my DOW 30 chart. I’ll have to update my calculations to delete
GE and add Walgreens Boots Alliance (WBA) since it has replaced GE in the DOW
30. WBA is best known for operating Walgreens drug stores.
FRIDAY 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).
On 10 May 2018 I
added stock positions to increase Stock investments to 58% based on more
evidence that the correction is over. This is high for me given that we are
late in this cycle (and as a retiree), but it indicates my bullishness after
the correction. I’ll sell these new positions quickly if the market turns down.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Friday, the VIX, Price, Sentiment & Volume indicators were
neutral. Overall this is a NEUTRAL indication.
