"U.S. home sales unexpectedly fell in June, posting their
third straight monthly decline as a persistent shortage of properties on the
market drove house prices to a record high…Existing home sales, which make up
about 90 percent of U.S. home sales, dropped 2.2 percent from a year ago in
June.” Story at…
My cmt: Home sales are watched by many as a recession
sign. Weakening home sales is a warning but certainly not a guarantee of
recession. Other part of the economy look good.
TRADE WARS AND GAME THEORY (Bloomberg Opinion)
“For many reasons, trade tensions are less damaging for
the U.S. than for China, whose growth model is still notably dependent on
foreign markets. This relative advantage is already evident in the performance
of the equity and currency markets of the two countries. While this advantage
certainly isn’t protection against some absolute damage, it gives the U.S. a
stronger hand to play.” - Mohamed El-Arian, Chief economic adviser at Allianz
SE, the parent company of Pimco. Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.2% to 2807.
-VIX was down about 2% to 12.62.
-The yield on the 10-year Treasury rose to 2.957%.
My daily sum of 17 Indicators slipped from -4 to -6 while
the 10-day smoothed version that negates the daily fluctuations dropped from zero
to -8, indicating that conditions in the market are worse than 2-weeks ago.
Interestingly, 2-weeks ago the S&P 500 was 2784 or less than 1% below today’s
value. That seems to suggest that the market will slip some from here.
Topping indicators (Bollinger Bands, RSI, Breadth vs.
S&P 500, etc.) are not indicating a top at this time, so the most likely outcome
is that the Index will drift down from here rather than see a serious drop.
I remain fully invested.
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…
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals dropped
to 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 Volume, VIX, Price & Sentiment indicators were
neutral. Overall this is a NEUTRAL indication.
