“The higher cost of renting and owning a home nudged
consumer prices higher in September, but inflation more broadly eased again
after a recent runup. The consumer price index rose 0.1% in September to mark
the sixth increase in a row…” Story at…
JOBLESS CLAIMS (Reuuters)
“The number of Americans filing for unemployment benefits
unexpectedly rose last week but remained near a 49-year low, and the increase
appeared unlikely to dislodge the view that the U.S. labor market remains
strong.” Story at…
CRUDE INVENTRIES (OilPrice.com)
“The U.S. Energy Information Administration reported a
build in commercial crude oil inventories of 6 million, speeding up an oil
price decline prompted by a variety of factors, including API’s Wednesday
estimate that inventories had risen by a hefty 9.75
million barrels in the week to October 5.” Story
at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 2.1% to 2728.
-VIX jumped up another 9% to 24.98.
-The yield on the 10-year Treasury slipped slightly to
3.143%. (Not much flight to safety here. That’s a worry.)
More selling on higher volume. No bottom today.
Indicators were little changed. Conditions are so bad they’re good – breadth,
Bollinger Bands, RSI all look like we’re at a bottom – same as yesterday.
The smoothed version of up-volume that was up yesterday
(surprisingly) got in line with other volume indicators and is negative
today. That drove internals back into a
negative indication for the markets.
Currently, my daily sum of 17 Indicators slipped from -3 to
-5 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations actually improved from -43
to -41. These numbers are not all that negative. I think the reason is that many indicators
are so low that they are in line with prior bottoms. That doesn’t mean that
we’re at a bottom today.
I haven’t been in a rush to get out of stocks because the
markets are so oversold, on a number of measures, that I suspected that the
market would bounce up. So far, NOT!
We have a sell-recommendation from the intermediate/long-term
indicator as of today. I had hoped that
the Index would stay above the 200-day or close slightly below it. Today, the
S&P 500 closed 1.4% below the 200-dMA. So much for hopes. If we have a close
below the 200-day Friday (or if I project that it will) I will cut to a 30%
stock allocation.
MOMENTUM ANALYSIS:
(Momentum analysis is not particularly useful in a selloff.)
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
declined to 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 - SELL
Thursday, the Sentiment
indicator was neutral; Price, Volume & VIX indicators were negative.
Overall this is a NEGATIVE indication that suggests reducing stock allocations.
If the S&P 500 closes below the 200-dMA (or appears that it will), I will
cut stock allocations to 30% stocks.
