PCE Prices … Personal Spending … Michigan Consumer Confidence … Interest Rates Will Trigger the Next Crisis … Intel ... Stock Market Analysis… ETF Trading … Dow 30 Ranking

PCE PRICES (CNBC)

“…the Federal Reserve's preferred inflation metric was stagnant during the month of August. The personal consumption expenditures (PCE) price index excluding volatile food and energy components was unchanged…” Story at…

https://www.cnbc.com/2018/09/28/us-bonds-and-fixed-income-economic-data-in-focus.html

 

PERSONAL SPENDING (Reuters)

“U.S. consumer spending increased steadily in August, supporting expectations of solid economic growth in the third quarter…”

https://www.reuters.com/article/us-usa-economy-spending/us-consumer-spending-rises-monthly-inflation-slows-idUSKCN1M81M1

 

CONSUMER CONFIDENCE (Briefing.com)

“The preliminary University of Michigan Consumer Sentiment Index hit 100.8 in September (Briefing.com consensus 97.0), which was the second-highest level since 2004.” More at…

https://www.briefing.com/Investor/Calendars/Economic/Releases/mich.htm

 

INTEREST RATES WILL TRIGGER THE NEXT CRISIS (Forbes)

“On Wednesday, the U.S. Federal Reserve hiked its benchmark interest rate by a quarter-percentage point to 2% - 2.25%, which is the highest level since April 2008. As rates continue to climb off their post-Great Recession record lows, market participants and commentators are showing almost no signs of fear as the stock market is hitting records again and complacency abounds. Unfortunately, "soft landings" after rate hike cycles are as rare as unicorns and virtually all modern rate hike cycles have resulted in a recession, financial, or banking crisis. There is no reason to believe that this time will be any different.” – Jesse Columbo. Commentary at…

https://www.forbes.com/sites/jessecolombo/2018/09/27/how-interest-rate-hikes-will-trigger-the-next-financial-crisis/#6134e2b26717

My cmt: I commented a long time ago that the next stock market crisis would begin like the year 2000 dot.com collapse: high valuation followed by FED hikes. We’ve got high valuation now. We’re just waiting for the FED to hike rates too fast. We aren’t there yet, but we must remain vigilant. 

 

INTEL (CNBC)

“Intel's interim CEO Bob Swan said the chipmaker has enough supply to meet its full-year revenue outlook in a letter posted on the company's website.” Story at…

https://www.cnbc.com/2018/09/28/amd-shares-plunge-after-intel-says-it-can-meet-its-guidance.html?__source=yahoo%7Cfinance%7Cheadline%7Cstory%7C&par=yahoo&yptr=yahoo

My cmt: I wrote back on 8 August, “While Intel (INTC) is no longer a momentum play, I think it is still a value play that is worth owning at this price…” The stock is down about 4% since 8 August. Today it was up about 3%. It is still not a momentum play, but it looks like a good value.

 

MARKET REPORT / ANALYSIS         

-Friday the S&P 500 was unchanged at 2914.

-VIX dipped about 2% to 12.12. 

-The yield on the 10-year Treasury rose to 3.062% as of 4:44PM.

 

Once again, this report looks a lot like yesterday’s blog. I don’t mean to be repetitive, but investors seem to be trying to make up their minds. Unchanged-volume was high today suggesting investor confusion; that can sometimes indicate a top.

 

We still have a significant warning from the Fosback Hi-Low Logic indicator.  This one is based on the fact that new 52-week highs and new 52-week lows should not both be high numbers at the same time. It is also a worry to see new 52-week lows exceeding 52-week highs. That is a recipe for a correction if it continues.

 

Currently, my daily sum of 17 Indicators remained -7 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations dipped from +3 to -1 indicating that conditions are slightly worse than 2-weeks ago.

 

For now, we’re in a bit of a flux as we wait for more information.  Where do the markets go from here? Up or down? There aren’t enough negative signs to suggest a significant sell-off, but neither do we feel overly optimistic.

 

We did see Market Internals improve on the day even though my indicators showed little to no change.

 

All in all, I remain a cautious Bull.

 

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

 

FRIDAY 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: Friday, the Price indicator was positive; Sentiment, Volume & VIX were neutral. Overall this is a NEUTRAL indication.

Durable Goods Orders … GDP … Jobless Claims … Stock Market Analysis… ETF Trading … Dow 30 Ranking

DURABLE GOODS ORDERS (Reuters)

“New orders for key U.S.-made capital goods fell in August after four straight months of strong gains, while shipments barely rose, but that will probably not change expectations of solid growth in business spending on equipment in the third quarter. The Commerce Department said on Thursday that orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.5 percent last month…” Story at…

https://www.reuters.com/article/us-usa-economy-durables/u-s-core-capital-goods-orders-unexpectedly-fall-in-august-idUSKCN1M71KT?il=0

 

GDP (MarketWatch)

“U.S. real gross domestic product for the second quarter rose at a 4.2% annualized rate, unrevised from the earlier estimate, the Commerce Department said Thursday.” Story at…

https://www.marketwatch.com/story/us-q4-gdp-growth-unrevised-at-42-rate-2018-09-27-8913054?ns=prod/accounts-mw

 

JOBLESS CLAIMS (Bloomberg)

“Filings for U.S. unemployment benefits rose last week, reflecting jumps in states hit by Hurricane Florence, though the national figure remains near the lowest in almost five decades, Labor Department figures showed Thursday.” Story at…

https://www.bloomberg.com/news/articles/2018-09-27/jobless-claims-surge-in-storm-hit-carolinas-boosting-u-s-total

 

MARKET REPORT / ANALYSIS         

-Thursday the S&P 500 rose about 0.3% to 2914.

-VIX dipped about 4% to 12.41. 

-The yield on the 10-year Treasury rose to 3.053% as of 4:57PM.

 

Dip buyers moved in today, but trouble remains on the horizon.

 

We still have a significant warning from the Fosback Hi-Low Logic indicator.  This one is based on the fact that new 52-week highs and new 52-week lows should not both be high numbers at the same time. The Fosback Logic indicator can have very long lead times so we can't worry over this one too much. It is also a worry to see new 52-week lows exceeding 52-week highs. That is a recipe for a correction if it continues.

 

Currently, my daily sum of 17 Indicators remained -7 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations remained +3 indicating that conditions are slightly better than 2-weeks ago.

 

For now, we’re in a bit of a flux as we wait for more information.  Where do the markets go from here? Up or down? There aren’t enough negative signs to suggest a significant sell-off, but neither do we feel overly optimistic. All in all, I remain a cautious Bull.

 

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

 

THURSDAY 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: Thursday, the Price indicator was positive; Sentiment, Volume & VIX were neutral. Overall this is a NEUTRAL indication.

FOMC Rate Decision … New Home Sales … Crude Inventories … Stock Market Analysis… ETF Trading … Dow 30 Ranking

FED DECISION (MarketWatch)

“The Federal Reserve raised interest rates for the third time this year and signaled it will raise the cost of borrowing again in December, but the central bank also left a hint it could pause at some point to assess how its rate hikes are affecting the economy.” Story at…

https://www.marketwatch.com/story/fed-hikes-interest-rates-signals-strong-support-for-another-increase-in-december-2018-09-26?ns=prod/accounts-mw

 

HOME SALES (Bloomberg)

“U.S. purchases of new homes rebounded in August from the slowest pace in almost a year, a potential sign of stabilization in the market, according to government data Wednesday.” Story at…

https://www.bloomberg.com/news/articles/2018-09-26/u-s-new-home-sales-rose-in-august-after-downwardly-revised-july

 

CRUDE INVENTORIES (OilPrice.com)

“A day after the American Petroleum Institute reported an inventory build that some traders took as a surprise and started selling their oil holdings, the EIA confirmed a build, at 1.9 million barrels for the week to September 21. Prices, however, did not react particularly strongly amid a flurry of other news coming in.” Story at…

https://oilprice.com/Energy/Energy-General/Oil-Markets-Unimpressed-By-Small-Crude-Build.html

 

MARKET REPORT / ANALYSIS         

-Wednesday the S&P 500 slipped about 0.3% to 2906.

-VIX rose about 4% to 12.89. 

-The yield on the 10-year Treasury slipped to 3.048% as of 4:44PM.

 

Markets rallied on the FOMC news at 2PM because the Fed felt they had inflation under control and might take a break from hiking rates after the next hike due in December. Unfortunately, investors had a change of heart and began selling after 2:30PM. Except for a slight uptick at the close, selling continued to the end.

 

The FED has not yet raised 3 times in a row so the bear market “3-steps-and-a-stumble” rule has not been triggered.  That old standby says 3 rate-hikes in a row portend trouble for the stock market.

 

We still have a significant warning from the Fosback Hi-Low Logic indicator.  This one is based on the fact that new 52-week highs and new 52-week lows should not both be high numbers at the same time. It is also a worry to see new 52-week lows exceeding 52-week highs. That is a recipe for a correction if it continues.

 

Currently, my daily sum of 17 Indicators was plunged from +3 to -7 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations slipped from +7 to +3 indicating that conditions are slightly worse than 2-weeks ago. 

 

Will investors buy the dip? We may not have to wait too long. Sentiment is high, but not at an extreme; RSI is high, but still neutral; the S&P 500 is still well above the 50-dMA.  No need to panic…yet.  What me worry?

 

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

 

WEDNESDAY 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). 

 

 

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: Wednesday, the Price indicator was positive; Sentiment, Volume & VIX were neutral. Overall this is a NEUTRAL indication.

Consumer Confidence … Stock Market Analysis… ETF Trading … Dow 30 Ranking

CONSUMER CONFIDENCE (Reuters)
“U.S. consumer confidence surged to an 18-year high in September as households grew more upbeat about the labor market, pointing to sustained strength in the economy despite an increasingly bitter trade dispute between the United States and China.” Story at…
https://www.reuters.com/article/us-usa-economy-confidence/u-s-consumer-confidence-hits-18-year-high-house-prices-slowing-idUSKCN1M51YY

MARKET REPORT / ANALYSIS         

-Tuesday the S&P 500 slipped about 0.1% to 2916.

-VIX rose about 2% to 12.42. 

-The yield on the 10-year Treasury was a bit higher at 3.095% as of 4:46PM.

 

We still have a significant warning from the Fosback Hi-Low Logic indicator.  This one is based on the fact that new 52-week highs and new 52-week lows should not both be high numbers at the same time.  When they are, it shows trouble in the Markets. The Fosback high-low Logic indicator is still issuing a warning for the long-term while the short-term indicator is close to a sell too. Fosback said this about the one-week version of the indicator: “A double-digit reading [like we have now] is rare and has nearly always been followed by sharply declining stock prices.”  I would add that it may take several months for those lower prices to show up. While this may be significant, unless we see a lot more negative signs, I won’t get worked up about the Hi-Low Logic Indicator.

 

Currently, my daily sum of 17 Indicators was unchanged at +3 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations improved from -2 to +7 indicating that conditions are better than 2-weeks ago. 

 

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 Neutral 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; Sentiment, Volume & VIX were neutral. Overall this is a NEUTRAL indication.

Fiscal Irresponsibility … Jeffrey Saut Commentary … When Will Rates Matter … Stock Market Analysis… ETF Trading … Dow 30 Ranking

HEIGHT OF FISCAL IRRESPONSIBILITY (Committee for a Responsible Federal Budget)

“The House Ways and Means Committee released “Tax Reform 2.0" Monday night [17 Sep 2018], which would make permanent most of last year’s tax bill that largely expires in 2025 under current law… “This is a plan built on quicksand – sinking in the very debt that finances it. Not only will it add hundreds of billions to the deficit, but it may actually slow long-term growth, especially if recent spending increases are also made permanent. The $657 billion score of the plan understates its true costs, since it is mostly over the final three years. We estimate the legislation will cost $4 trillion over the next 20 years, or $5 trillion with interest…Our society is aging, and our largest trust funds and social programs are running out of money. It’s a fiscal hole in the trillions that isn’t going to be fixed with more unpaid-for tax cuts.” - Maya MacGuineas, president of the Committee for a Responsible Federal Budget. Commentary at…

http://www.crfb.org/press-releases/further-tax-cuts-are-height-fiscal-irresponsibility

Remember…the Republicans ran for election on a balanced budget.  A balanced budget was the foundation of the Tea Party.  What a bunch of liars.  This is why I dislike politicians … “You can keep you doctor…you can keep your health plan.” They are ALL liars!

 

JEFFREY SAUT COMMENTARY EXCERPT (Raymond James)

“Since that undercut low [February 9, 2018] the SPX is better by nearly 16% and has left the doubters scratching their collective heads. More importantly, the equity markets have left many of the “pros” scrambling to play catch-up and now that the averages have tagged new all-time highs there should be a rush to commit more cash. While this may not lead to a vault to the upside (more likely a grind higher) it certainly should contain any downside, provided there is not a “black swan” news event.” – Jeffery Saut. Commentary at…

https://www.raymondjames.com/wealth-management/market-commentary-and-insights/investment-strategy

My cmt: The “undercut low he is talking about was a retest of the prior low. In my case, I called the top, but I couldn’t call the bottom because the re-test low did not meet my test for market internals.  We still came out a couple of % ahead, but we missed the bottom by about 2-weeks.  The important caution here is to remember that while it is normal for the market to retest prior lows with an undercut low, many of those retests simply lead to more selling.

 

WHEN WILL RATES MATTER? (Real Investment Advice)

“Economic growth has peaked every time rates got this extended. (Which shouldn’t be a surprise.) Whenever rates have previously pushed 2-standard deviations of their 2-year moving average – bad things have tended to occur such as the Crash of 1974, Crash of 1987, Long-Term Capital Management, Russian Debt Default, Asian Contagion, Dot.com crash, and the Financial Crisis. While the markets are currently ignoring the risk of higher rates…we are near the point where “rates will matter.” – Lance Roberts. Commentary at…

https://realinvestmentadvice.com/weekend-reading-whats-the-magic-yield-number/

 

MARKET REPORT / ANALYSIS         

-Monday the S&P 500 slipped about 0.4% to 2919.

-VIX rose about 4% to 12.20. 

-The yield on the 10-year Treasury was higher at 3.089% as of 5PM.

 

This may be a broken record report, but we still have a significant warning from the Fosback Hi-Low Logic indicator:

The Fosback high-low Logic indicator is still issuing a warning for the long-term while the short-term indicator is close to a sell too. Fosback said this about the one-week version of the indicator: “A double-digit reading is rare and has nearly always been followed by sharply declining stock prices.” 

 

We hit a double digit reading on 20 Sept and it remained so today. In the 7-years that I have data on this indicator, I have only seen one period when the indicator flashed sell.  That was off and on for an extended period from Dec 2014 until early Feb 2015. The signals were followed by a top in early March that preceded a 12% correction. The key point is that there was a lead time of more than 2-months before a significant market drop occurred. We also saw several Hindenburg Omens in the same time frame.  So far, no H. Omens yet.

 

Currently, my daily sum of 17 Indicators declined from +7 to +3 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations improved from -10 to -2 indicating that conditions are better than 2-weeks ago. 

 

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

 

MONDAY MARKET INTERNALS (NYSE DATA)

Market Internals slipped to Neutral 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: Monday, the Price indicator was positive; Sentiment, Volume & VIX were neutral. Overall this is a NEUTRAL indication.

Existing Home Sales … Stock Market Analysis… ETF Trading … Dow 30 Ranking

EXISTING HOME SALES (Reuters)

“U.S. home sales flatlined in August but inventory increased for the first time in three years as the housing market continued to struggle despite strength across the broader economy.” Story at…

https://www.reuters.com/article/us-usa-economy-housing/u-s-existing-home-sales-unchanged-in-august-idUSKCN1M026A

 

MARKET REPORT / ANALYSIS         

-Friday the S&P 500 slipped about a point to 2930.

-VIX dropped about 1% to 11.68. 

-The yield on the 10-year Treasury was unchanged at 3.064% as of this post.

 

The Fosback high-low Logic indicator is still issuing a warning for the long-term while the short-term indicator is close to a sell too. I don’t have the data to validate this indicator; I picked it up after reading Fosback’s book, “Stock Market Logic.” Fosback said this about the one-week version of the indicator: “A double-digit reading is rare and has nearly always been followed by sharply declining stock prices.” 

 

We hit a double digit reading yesterday and it remained so today. In the 7-years that I have data on this indicator, I have only seen one period when the indicator flashed sell.  That was off and on for an extended period from Dec 2014 until early Feb 2015. The signals were followed by a top in early March that preceded a 12% correction. We also saw several Hindenburg Omens in the same time frame.  So far, no H. Omens.

 

BULLISH SIGNS

-Up volume continues to pick up.

-Size of the up-moves have been larger than the down moves over the last month.

-Late day action (the Smart Money) is still headed up.

-Breadth (measured as the % of NYSE stocks advancing over the past 10-days) is headed up and is now 53.3% indicating that more than half of all stocks on the NYSE have been advancing over the last 10-days.

-Breadth vs the S&P 500 index indicates that the Market Internals are improving faster than the Index.

-Money Trend is now in positive territory and continues up.

 

NEUTRAL SIGNS

-VIX is neutral.

-Bollinger Bands on the S&P 500 index are very close to an “overbought’ reading today, but RSI is remains unchanged and solidly neutral (62, 14-day SMA) so we have no confirmation for the Bollinger Band signal.

 

BEAR SIGNS

-New-high/new-low data is headed lower and the Fosback Hi-Low Logic index is showing an unhealthy situation where both 52-week highs and 53-week lows are elevated.

-Statistically, the S&P 500 is too calm (measured by daily moves) suggesting some down moves ahead. (This was a reliable indicator for years but it has failed over the last year or so.) Sometimes bullishness just overtakes an indicator.  For the time being, this one is dead.

 

Even so, as noted yesterday, most of my indicators are improving.

 

Currently, my daily sum of 17 Indicators improved slightly from +6 to +7 (a positive number is bullish; negatives are bearish) while the 10-day smoothed version that negates the daily fluctuations improved from -21 to -10 indicating that conditions are better than 2-weeks ago. 

 

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

 

FRIDAY MARKET INTERNALS (NYSE DATA)

Market Internals remained 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). 

 

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: Friday, the Price indicator was positive; Sentiment, Volume & VIX were neutral. Overall this is a NEUTRAL indication.