“American manufacturers are on a roll: Business
conditions surged in August to a 14-year high, according to a a survey of
industry executives. The Institute for Supply Management said its manufacturing index jumped
to a 14-year high of 61.3% last month from 58.1% in July.”
Story at…
CONSTRUCTION SPENDING (MarketWatch)
“Construction expenditures were 0.1% higher in July than
in June, led by the public sector, the Commerce
Department said Tuesday. Outlays in July were 5.8% higher than a
year ago.” Story at…
AUTO SALES (WSJ)
“Most major auto makers reported increases in U.S. sales
in August, though analysts expect vehicle demand to cool for the remainder of
2018 amid higher interest rates and rising vehicle prices.” Story at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 0.2$ to 2897.
-VIX rose about 2% to 12.86.
-The yield on the 10-year Treasury was flat at 2.898% as
of this post.
I measure Sentiment as %-Bulls (Bulls/{bulls+bears})
based on the amounts invested in Rydex/Guggenheim mutual funds. Sentiment is
once again negative with a %-bulls value of 92%. This is the same as we saw
during the dot.com era on a std deviation basis. We matched this extreme back
in May-June 2015 shortly before a 12% correction.
Sentiment isn’t by itself a great indicator since
sentiment can remain elevated for some time, but it is a level that has
preceded pullbacks of varying degrees – from small pullbacks of a couple % to
major crashes. Other indicators are mostly negative too.
Currently, my daily sum of 17 Indicators slipped from -5
to -6 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations dipped from +42 to +32
indicating that conditions are worse than 2-weeks ago. Indicators continue to slip and have a
negative outlook at this point. Some specific details follow:
Utilities are outperforming the S&P 500.
Bollinger Bands and the Overbought/Oversold Ratio have
cleared their overbought signal. RSI was a neutral 69 (RSI, 14-day, SMA).
The Price indicator that measures the size of up moves vs
the size of down moves is slipping, but it remains neutral. If Price and
Sentiment indicators both switch to negative, it would give us a sell signal in
the longer-term indicator. We’re not
there yet and I’d be guessing if I said I knew which way the markets may go
now; therefore…
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…
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 was
negative; Volume & VIX were neutral. Overall this is a NEUTRAL indication.
