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