“U.S. hiring cooled in July after more-robust gains than
previously reported, while the unemployment rate slipped back below 4 percent
and wage increases remained subdued, reinforcing a picture of steady
labor-market growth in line with the Federal Reserve’s outlook for gradual
interest-rate hikes. Non-farm payrolls advanced 157,000…” Story at…
ISM SERVICES (MarketWatch)
“The Institute for Supply Management said Friday that its
non-manufacturing index fell to 55.7% in July, an 11-month low,
from 59.1%.” Story at…
IS THIS 1937 (Felder report)
“It was over three years ago that Ray Dalio first
proposed his 1937 analog.
After the presidential election, he refreshed it in the context of growing
global populism so
that it looks like this:
1.Debt Limits Reached at Bubble Top, Causing the Economy and
Markets to Peak (1929 & 2007)
2.Interest Rates Hit Zero amid Depression (1932 &
2008)
3.Money Printing Starts, Kicking off a Beautiful
Deleveraging (1933 & 2009)
4.The Stock Market and “Risky Assets” Rally (1933-1936 &
2009-2017)
5.The Economy Improves during a Cyclical
Recovery (1933-1936 & 2009-2017)
6.The Central Bank Tightens a Bit, Resulting in a
Self-Reinforcing Downturn (1937)” Additional commentary and charts at…
My comment: Ruh-Roh!!
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.5% to 2840.
-VIX dropped about 5% to 11.64.
-The yield on the 10-year Treasury slipped to 2.947%.
Bollinger Bands indicate levels 2-std deviations above
and below the S&P 500 21-dMA. When the market is very calm, the 2-std
deviation level contracts toward the Index value. When the bands get very close
together, a technical signal is triggered called a “squeeze”. There is a Bollinger
Band Squeeze today on the S&P 500. That’s
suggests a breakout, but its direction is unknown.
RSI can sometimes answer whether the move will be up or
down. Unfortunately, RSI isn’t giving a good clue regarding the direction of
the breakout because RSI is basically neutral.
The chart of the S&P 500 is approaching the short-term upper trend line. That might suggest a breakout would be down, but that too
is not a clear signal. The longer-term Index
upper trend line indicates that the Index has room to go a lot higher. Other
topping indicators are not suggesting a drop, so we may just have to wait and
see what happens. The squeeze may last long enough for other indicators to
signal a breakout direction.
Currently, my daily sum of 17 Indicators jumped from -5 to
+5 while the 10-day smoothed version that negates the daily fluctuations improved
from -17 to -8. Bullish signs are the norm today.
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%.
I remain fully invested.
MOMENTUM ANALYSIS:
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
*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.
*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 improved
to 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 indicator was positive; Volume, VIX &
Sentiment indicators were neutral. Overall this is a NEUTRAL indication.
