“Sales of new U.S. single-family homes increased more
than expected in May as transactions in the South surged to near an 11-year
high and dampened prices, but the overall housing market remained constrained
by a dearth of properties for sale.” Story at…
THE BUFFET VALUATION INDICATOR (Advisor Perspectives)
“…both the "Buffett Index" and the Wilshire
5000 variant suggest that today's market remains at lofty valuations — similar
to the housing-bubble peak in 2007, although off its interim high in Q1 of
2015… While this indicator is a general gauge of market valuation, it's not
useful for short-term market timing...” – Jill Mislinsky. Additional charts and
commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was down about 1.4% to 2717.
-VIX jumped about 26% to 17.34.
-The yield on the 10-year Treasury slipped to 2.876%.
My daily sum of 17 Indicators dropped from -6 to -10,
while the 10-day smoothed version dropped from -18 to -34. A number below zero
shows most indicators are bearish.
My Money Trend indicator is bearish.
The Bollinger Band indicator dropped almost into
overbought territory; RSI (14-d,SMA) dropped a lot too, but remained giving a neutral
signal and is now 39.
Breadth, measured as the % of stocks on the NYSE that
advanced over the last 10-days, fell to 42.5% and that is an “oversold”
indication on the overbought/oversold ratio. (More stocks have been going down
over the last 2-weeks than have been going up.) The oversold reading is bullish,
but this indicator can be very early. Until it is confirmed by Bollinger Bands
and RSI it is too early to act.
The spread between the Cyclical Industrials (XLI-ETF) and
the S&P 500 has narrowed over the last few sessions and that’s a good sign. (When investors are worried they sell
cyclicals.) XLI is underperforming the S&P 500 on every time frame I track,
but it may be changing direction and that would be bullish.
The S&P 500 dropped to the lower trend line. It was
on a big day (statistically-significant in my system) and that often indicates
a turn-around point. About 60% of the time we’d expect an up-day Tuesday.
The chart still looks ok. The S&P 500 dropped to the
50-dMA as we suggested it might do last week. That’s OK, but further declines
from here would break the lower trend line and would be a bearish sign.
Let’s see what happens tomorrow.
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…
We may be back in correction mode; momentum is a bad way
to evaluate stocks in a correction. I am not saying we are in a correction, but
it’s possible.
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained Negative 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: Monday, the VIX indicator turned negative; Price, Sentiment
& Volume indicators were neutral. Overall this is a NEUTRAL indication.
