“With surging deficits in the U.S., mounting public debt,
and unfavorable demographics, not to mention rising external debt levels of
some emerging market economies, these risk factors reduce policy space for
responding to exogenous macroeconomic shocks…The dependency on liquidity,
interventions, and debt has displaced fiscal policy that could support
longer-term economic resilience.
This doesn’t mean the markets will “mean revert” tomorrow,
but it does suggest that there is a rising risk of disappointment for economic
growth, and ultimately earnings, in the future.” – Lance Roberts. Commentary
at…
WHY INTEL’S STOCK MAY SEE A MASSIVE REBOUND
(Investopedia)
“Despite the steep stock declines, analysts’ views on the
company remain strong. Since the chipmaker last reported results in July,
analysts have been raising their estimates for the company. It comes in stark
contrast to the declining stock, helping to push Intel's valuation to the
lowest levels in years…Intel's shares are either presenting investors with an
incredible opportunity; or, investors currently selling the stock and
pushing the price lower aren't as optimistic as the analysts about the future
of the business. We will soon find out.” Commentary at…
https://www.investopedia.com/news/why-intels-stock-may-see-massive-rebound/?partner=YahooSA&yptr=yahoo
https://www.investopedia.com/news/why-intels-stock-may-see-massive-rebound/?partner=YahooSA&yptr=yahoo
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 9% since then. Ouch, but I am still relying on the CEO’s
comment. Mr. Swan said, “Our biggest challenge in the second half [of 2018]
will be meeting additional demand, and we are working intently with our
customers and our factories to be prepared so we are not constraining our
customers' growth.” With high demand it still seems like this selloff is
overblown. The resolution of divergent opinions will probably play out at
Intel’s next earnings report due the last week in October. I consider Intel a buy at this price.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.5% to 2904.
-VIX dropped about 7% to 12.79.
-The yield on the 10-year Treasury rose to 3.062% as of
this post.
Sentiment is still elevated, but it has dropped below
action levels and that would allow the market to make further gains, baring
other issues.
The Squeeze is on. Bollinger Bands on the S&P 500
index are exhibiting a “Squeeze” (top and bottom bands are close together)
suggesting a breakout (up or down) is coming. The S&P 500 Index is now much
closer to the upper band suggesting that the break is more likely to be
down. We need to see confirmation by
RSI, but RSI is still solidly neutral (53, 14-day SMA) so no need to panic yet.
The past three squeezes have led to little or no reaction from the stock
market.
Currently, my daily sum of 17 Indicators remained
unchanged at zero (a positive number is bullish; negatives are bearish) while
the 10-day smoothed version that negates the daily fluctuations improved from
-51 to -45 indicating that conditions are slightly better than 2-weeks ago.
Overall, the indicators are improving. Tariffs are still
an issue, but the markets seem OK so far. Investors understand the issue. The
Trump administration is attempting to get China to enforce intellectual
property rights and trade fairly with the US. So far, the Chinese don’t seem
inclined to negotiate. I think they
underestimate the resolve of the Trump administration and that of the American
people, assuming the public is paying attention to the real reasons for the tariffs.
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, Volume
& VIX were neutral. Overall this is a NEUTRAL indication.
