“U.S. stock benchmarks ended near session lows Wednesday
as the Federal Reserve completed its second increase to benchmark interest
rates in 2018, as expected, but signaled a slightly more aggressive plan to
tighten monetary policy this year than had previously been projected.” Story at…
PRODUCER PRICE INDEX (Reuters)
“U.S. producer prices increased more than expected in
May, leading to the biggest annual gain in nearly 6-1/2 years, the latest sign
of a gradual building up of inflation pressures… The producer price index for
final demand rose 0.5 percent last month, boosted by a surge in gasoline prices
and continued gains in the cost of services…” Story at…
CRUDE INVENTORIES (OilPrice.com)
“The Energy Information Administration reported a large
crude oil draw of 4.1 million barrels for the week to June 8, after a 2.1-million-barrel increase
a week earlier.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dipped about 0.4% to 2776.
-VIX was up about 5% to 12.94.
-The yield on the 10-year Treasury rose to 2.975%.
Sentiment: I measure Sentiment as %-Bulls
(Bulls/{bulls+bears}) based on the amounts invested in Rydex/Guggenheim
long/short mutual funds. I then compare those values on a standard deviation
basis to extremes seen in the dot.com era. We hit values as high as that on 1
Feb of this year near the beginning of the correction.
But just because sentiment is high, it does not guarantee
a crash, as we observed recently. Importantly, Sentiment has fallen throughout
this correction process and reached 76%-bulls Tuesday. That’s a high number, but a far cry from the
recent high of 91%-bulls in February. The important point here is that the
recent drop in the %-bulls is a good indication that this rally can keep going...but there were troubling signs today.
My daily sum of 17 Indicators crashed from +8 to -3,
while the 10-day smoothed version dropped from +48 to +40. A number above zero
shows most indicators are bullish. This was a big drop in the indicators in one
day so we’ll have to pay attention to see if Wednesday’s weakness continues. The loss today was all late-day action, the so
called Smart Money. I don’t like to bet against the Smart Money so we’ll watch
and see where this goes.
It’s been a long day so I’ll leave it there.
My longer-term indicator system remains bullish and I
remain a bull.
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals declines
to 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. 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: Wednesday, only the Price indicator was positive; the Sentiment,
Volume, and VIX indicators were neutral. Overall this is a BULLISH indication,
but much less so than just a day ago.
