Small Business Optimism … Stock Market Analysis… ETF Trading … Dow 30 Ranking

SMALL BUSINESS OPTIMISM (Advisor Perspectives)
“The Small Business Optimism Index marked its second highest level in the survey’s 45-year history at 107.9, rising to within 0.1 point of the July 1983 record-high of 108. The July 2018 report also set new records in terms of owners reporting job creation plans and those with job openings.”  Story at… 

https://www.advisorperspectives.com/dshort/updates/2018/08/14/nfib-small-business-survey-small-business-optimism-index-nears-survey-high-in-july

 

MARKET REPORT / ANALYSIS         

-Tuesday the S&P 500 was up about 0.6% to 2840.

-VIX was fell about 1o% to 13.31. 

-The yield on the 10-year Treasury was unchanged at 2.900% as of this post.

 

It appeared that we had a good turnaround on the day with good internals, but the indicators didn't agree.  

 

Currently, my daily sum of 17 Indicators remained -7 for Tuesday (the sum of indicators are bearish) while the 10-day smoothed version that negates the daily fluctuations fell from -24 to -30. (For a more detailed look at the indicators look at Friday’s blog post.)

 

Numbers are still negative. Unless these numbers turn, the most likely scenario remains a decline in the 3-5% range (from the top). If it happens, that would drop the Index to about 2775. Since we had a good bounce today, the uncertainty in Italy may not be the problem that was first thought. Let’s hope so.

 

On a less optimistic note, Tuesday was a statistically-significant, up-day. That just means that the price-volume move up exceeded statistical parameters that I track. The stats show that about 60% of the time a statistically significant move up will be followed by a down-day the next day. I’m not saying today was a top, but nearly every top is on a statistically-significant, up-day. Let’s hope today’s improving internals continues since it is likely that the S&P 500 will follow.

 

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…

http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

 

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…

https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

 

TUESDAY 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). 

I am now 50% invested in stocks. For me, fully invested is a balanced 50% stock portfolio. As a retiree, this is a position with which I am comfortable unless I am in full defense mode or feeling especially optimistic.

 

INTERMEDIATE / LONG-TERM INDICATOR

Intermediate/Long-Term Indicator: Tuesday, the Price indicator was positive; Volume, VIX & Sentiment indicators were neutral. Overall this is a NEUTRAL indication.