“Industrial production rose a healthy 0.3% in
September, the
Federal Reserve reported Tuesday.” Story at…
JOLTS – JOB OPENINGS (Reuters)
“U.S. job openings jumped to a record high in August, far
outpacing a rise in hiring, suggesting that companies could be increasingly
having difficulties finding qualified workers.” Story at…
IS A YEAR END RALLY POSSIBLE (Real Investment Advice)
“While a year-end rally is certainly feasible, the
probability of the markets setting new highs has been markedly reduced. As I
have repeatedly discussed over the last several weeks, prudent portfolio
management practices reduce inherent portfolio risk thereby increasing the odds
of long-term success. Any rally that occurs over the next few days from the
current levels SHOULD be used as a “sellable rally” to rebalance
portfolios and related risk…Retain cash raised from sales for
opportunities to purchase investments later at a better price.” – Lance
Roberts. Commentary at…
INSTITUTIONAL INVESTORS PULL FUNDS FROM BLACKROCK
(Bloomberg)
“Long-term net inflows of $10.6 billion in the [3rd]
quarter were the lowest since 2016, a result Chief Executive Officer Larry Fink
called disappointing on Tuesday. Institutions withdrew $24.8 billion from
BlackRock’s index and active products in the period.”
https://www.bloomberg.com/news/articles/2018-10-16/blackrock-earnings-beat-estimates-despite-institutional-outflows
Chart from ZeroHedge at…
My cmt: The key point here is that Institutional
Investors (the Smart Money) were selling while other were buying.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 2% to 2810.
-VIX dropped about 18% to 17.55.
-The yield on the 10-year Treasury rose slightly to 3.161%
as of 4:29pm.
I’ve been expecting a bounce and today we got it. We’re
not out of the woods yet, though. Now we have to see if the markets can make
new highs. We have resistance at the 100-day moving average (100-dMA) and the
S&P 500 may struggle to break above it.
Today was a statistically-significant, up-day. 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.
The Index is now 4.1% from its prior top.
Today was the first day in a while that the late day
action (the Smart Money) has turned up
on a smoothed 10-day basis. The pros have been selling for a while.
Overall, my daily sum of 17 Indicators improved a bit,
from -8 to -7 (a positive number is bullish; negatives are bearish) while the
10-day smoothed version that negates the daily fluctuations actually slipped
from -47 to -49.
There are still a lot of negatives in the indicators so
now we’ll just have to watch and see how far the index can bounce. We may have to decide whether to reduce stock
holdings if it appears that the bounce is not sustainable. We need to see the
S&P 500 improve along with indicators.
MOMENTUM ANALYSIS:
(Momentum analysis is not 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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
to 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).
INTERMEDIATE / LONG-TERM INDICATOR - SELL
Tuesday, the
Sentiment and Price indicators were neutral; 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, 2-days in succession,
I will probably cut stock allocations to 30% stocks. It depends on S&P 500
and indicators. I am expecting a bounce soon.
