JOBLESS CLAIMS (Reuters)
“The number of Americans filing for unemployment benefits
unexpectedly fell last week, hitting near a 49-year low in a sign the job
market remains strong.” Story at…
PHILADELPHIA FED (MarketWatch)
“The Philadelphia Fed manufacturing index rebounded in
September after slowing sharply in the prior month. The index rose to a
two-month high of 22.9 in September from 11.9 in August…” Story at…
LEADING ECONOMIC INDICATORS (Conference Board)
“The Conference Board Leading Economic Index® (LEI) for
theU.S. increased 0.4 percent in August to 111.2 (2016 = 100), following a 0.7
percent increase in July, and a 0.5 percent increase in June. The leading
economic index is now well above its previous peak (March 2006, 102.4). ‘The
leading indicators are consistent with a solid growth scenario in the second
half of 2018 and at this stage of a maturing business cycle in the US, it
doesn’t get much better than this,’ said Ataman Ozyildirim, Director of
Business Cycles and Growth Research at The Conference Board.” Press release at…
ELECTION MEDDLING IS NOT NEW
“In 1940, fearing a third Roosevelt term, the Third Reich
had sought to influence the Presidential election by placing newspaper ads and
paying for isolationist congressmen to attend the Republican National
Convention.” – John Meacham, pg 161, “The Soul of America.”
HIGH LOW LOGIC INDEX WARNING (TC2000)
“The High Low Logic Index was developed by Norman
Fosback. It is calculated as the lesser of the number of new highs or new lows
divided by the total number of issues traded. Daily or weekly NYSE data is
typically used in the calculation. The concept behind the indicator is that
either a large number of stocks will establish new highs or a large number of
stocks will establish new lows, but normally not both at the same time. Since
the High Low Logic Index is the lesser of the two ration, high readings are
infrequent. When a high indicator reading does occur, it signifies that market
internals are inconsistent with many stocks establishing new highs at the same
time that many stocks establish new lows. When this happens, it is considered
bearish for stock prices.” From…
My cmt: We got the warning today. See below.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.5% to 2908.
-VIX dropped about 8% to 11.75.
-The yield on the 10-year Treasury rose to 3.069% as of
this post.
FOSBACK HI-LOW LOGIC INDICATOR ISSUES WARNING
I rarely get a signal from this indicator. My data only
goes back to August of 2011 and it has only given a bearish call once. The last
time (and only time in my records) the Fosback Hi-Low Logic Index signaled a
sell was about 4-months before the top of a 12% correction back in May-Aug
2015. Even if the warning this time is correct, it is clear that this indicator
does not give a very timely warning. So, what is it saying?
Today, the indicator flashed a “crash” 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 one; 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 today.
Bollinger Bands on the S&P 500 index are giving an
“overbought’ reading today, but RSI is still solidly neutral (62, 14-day SMA)
so we have no confirmation. If anything, most of my indicators are improving.
Currently, my daily sum of 17 Indicators improved
slightly from +1 to +5 (a positive number is bullish; negatives are bearish)
while the 10-day smoothed version that negates the daily fluctuations improved
from -35 to -22 indicating that conditions are slightly better than 2-weeks
ago.
We did have a statistically-significant, up-day today.
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 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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
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: Thursday, the Price indicator was positive; Sentiment, Volume
& VIX were neutral. Overall this is a NEUTRAL indication.
