“American employment picture continues to appear strong. ADP
on Wednesday reported 227,000 new private-sector jobs in
October. Economists polled by Econoday had expected 178,000 new jobs.” Story at…
CRUDE INVENTORIES (StreetInsider)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 3.2 million barrels from the
previous week.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.1% to 2712.
-VIX dropped about 5% to 21.23.
-The yield on the 10-year Treasury rose to 3.162% as of 11:17
pm.
Volume remained strong today, about 25% above the monthly
average. It’s a nice bullish sign,
because it suggests some conviction behind the move up in the Index. 63% of the
total volume was up-volume and 60% of stocks advanced today.
Money Trend indicator remains bullish. There was bearish late-day
selling today that took the S&P 500 down over 1% in the last hour of
trading. That suggested that the Pros were selling, a bearish indication, but
that was offset by a bullish closing-tick (sum of last trades of the day) of
+472…so not bad.
My daily sum of 17 Indicators improved from -7 to -3 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -45 to -42.
The 200-dMA is now 2765 and that is the resistance point the
S&P 500 needs to move above.
Today is trading day 29 for this pullback. The drop is now
7.5% (9.9% max). (These numbers are based on closing data.) Over the last
10-years, for drops less than 10%, the average time from top to bottom has been
32-days to a final bottom, including a retest. (The low is usually at the
retest.) Except for major crashes, the average correction was about 12% and
lasted 53 trading-days including retests.
Just looking at prior corrections, it could be a month
before we see a retest of the low, assuming we have a retest. It is possible that the market will go straight
up from here. It’s not likely this time
since the worries that caused the pullback are still hanging over the market
and it didn’t look like we had a washout of sentiment.
So far, we have not had a successful test; without a
successful test of the prior low of 2641, we can’t call an end to this retreat.
I remain bullish in the short-term.
MOMENTUM ANALYSIS:
(Momentum analysis is not useful in a selloff. As an
example, Proctor and Gamble was 16th last week – now because of a
flight to safety - it is #2. If the
downturn ends, it will drop quickly again.)
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 improved
to Neutral.
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 - SELL
Wednesday, the
Price indicator was positive; Sentiment was neutral; Volume and VIX indicators
were negative. Overall this is a NEGATIVE indication. I am ignoring this longer-term
indicator for the time being. Short-term
we expect a bounce to continue.
