“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…
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…
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…
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…
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…
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.
