“The last time unemployment dropped below 4% was April
2000 — the peak of the dot-com derangement. The economy was in recession by
March 2001… less than one year later.” See the chart below…
Chart and commentary from…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 slipped about 0.3% to 2779.
-VIX rose about 0.4% to 12.18.
-The yield on the 10-year Treasury rose to 2.944%.
Today’s commentary/analysis looks a lot like yesterday’s.
My daily sum of 17 Indicators remained +5, while the
10-day smoothed version improved from +25 to +31. The key takeaway is that
conditions are better now than they were 2-weeks ago. A number above zero shows
most indicators are bullish.
Overbought signals…same as yesterday:
Bollinger Bands are no longer issuing a bearish “squeeze”
warning because the upper and lower bands (2-std deviations from the 20-day
median) have slipped farther apart. The S&P 500 Index remained above the
upper band and that’s signaling an “overbought” condition. The
overbought/oversold ratio is also “overbought.” This one is based on breadth and
the % of advancing stocks has been high recently. These are the bearish
indicators, but overbought conditions are not unusual after a correction bottom
as investors pile back into the market. For that reason, I am not worried and I
am ignoring (for the time being) the negative overbought indications. RSI is a
neutral 66 so this is not confirming the overbought conditions.
Most other indicators are bullish and Market Internals remained
bullish.
My longer-term indicator system remains bullish and I
remain a bull. I’ll pay attention when the Index reaches the vicinity of 2800;
we could be due for a small pullback (say a couple %) at that time. Unless the
markets get way ahead of themselves, there’s no point to trade small market
moves – at least that’s my take.
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…
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.
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 Price and VIX Indicators remained positive; Volume
and Sentiment indicators were neutral. Overall this is a BULLISH indication.
