“Factories in the New York region churned out goods at a
slower but still-flourishing pace in September, a survey of executives showed.
The Empire State manufacturing index fell to 19 points in September from a 25.6
reading in August that was a 10-month high.” Story at…
TARIFFS (CNBC)
“President Donald Trump will put 10 percent tariffs on an
$200 billion in Chinese goods, which will go up to 25 percent at the end of the
year.” Story at…
APPLE EXCLUDED FROM TARIFFS (ZeroHedge)
“…a product code that covers Apple Inc.’s Watch and
AirPods - as well as similar smart watches, fitness trackers and other goods
made by competitors - was removed from the final list, Bloomberg sources said.”
JEFFREY SAUT COMMENTARY EXCERPT (Raymond James)
“In the world we live in, few look at risk. Most only
look at reward. The few who do look at risk (the educated, the Street savvy,
etc.) make their money at the expense of the great unwashed majority who
swallow the noise nonsense about getting rich quick. Investing is a get rich
slowly process. You have to put your money at risk in the face of uncertainty.
Emotions run rampant before the uncertainty of floating, fluctuating, often
violent and volatile markets. Constantly discounting prices are fickle and full
of surprises. Disorder is usually the norm.
The call for this week: ‘It’s a bull market
you know!’” – Jjeffrey Saut.
JOHN HUSSMAN COMMENTARY EXCERPT (Hussman Funds)
“Last week [end of August], the stock market recorded the
most offensive valuation extreme in history, on the basis of measures best
correlated with actual subsequent returns across a century of market cycles.
The advance brought the S&P 500 Index about 1% above its previous January
26 record. The current extreme eclipses both the 1929 peak, and the 2000 bubble
peak.
I am aware of no plausible
conditions under which current extremes are likely to work out well for
investors. There are a few possibilities that could involve a smaller loss than
the two-thirds
of market capitalization that I expect to vanish, as the
run-of-the-mill, baseline expectation for the S&P 500 over the completion
of this cycle. Yet it’s worth recognizing that the completion of every market
cycle in history has taken the most reliable valuation measures we identify
(those best correlated with actual subsequent S&P 500 market returns) to
less than half of current levels.” - John Hussman, PhD.
My cmt: We can’t disagree with Mr. Hussman’s comment and
analysis; the problem, as always, is the timing. There are now about 3000 issues traded on the
NYSE. In 1996 there were 7400 companies listed on the exchange. During the
interim, population has increased, so there are now more investors chasing
fewer issues. Thus, we have more demand and less supply. We should not be
surprised by extremes in the market’s valuation – it is to be expected. This
really illustrates why valuation alone is a poor tool for market timing.
NATIONAL DEBT – THE CLOCK SAYS IT ALL
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dropped about 0.6% to 2889.
-VIX jumped about 13% to 13.68.
-The yield on the 10-year Treasury slipped to 2.993% as
of this post.
Currently, my daily sum of 17 Indicators improved from -3
to 0 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from -56 to -51
indicating that conditions are slightly better than 2-weeks ago.
Overall, the indicators are improving. I think the market
will climb somewhat higher before we see a retreat, but we do remain somewhat
concerned about possible market reaction to the tariffs. The Trump
administration is attempting to get China to enforce intellectual property
rights and trade fairly with the US. So far, they don’t seem inclined to
negotiate. I think they underestimate
the resolve of the Trump administration and that of the US. In the meantime,
however, the market could become unsettled.
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.
*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
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: Monday, the Price indicator was positive; Sentiment, Volume
& VIX were neutral. Overall this is a NEUTRAL indication.
