“…our instincts told us the equity markets bottomed on a
trading basis on October 11, 2018 at ~2710, but last Thursday surprised us as
the SPX lost a large 62 points from Wednesday’s intraday high into Thursday’s
intraday low of ~2755. This has left the SPX vulnerable to further downside…
Friday was an inside day in the charts, which is rare on an option expiration,
so traders will be sensitive to the SPX’s intraday high (2797.77) and low
(2760.27) from Friday.” Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dropped about 0.4% to 2756.
-VIX slipped about 1% to 19.64.
-The yield on the 10-year Treasury rose to 3.199% as of 5:04pm.
Some bullish signs: The S&P 500 still has had only 5
days that were up this month (that’s very bullish); RSI is oversold; Smart
Money is up.
Some of the other indicators that were previously bullish
turned down today…Ruh, roh.
We tested the 200-dMA again Monday; the Index failed the
test and closed 0.4% below the 200-dMA. I have been concerned about holding the
200-day, but perhaps I have been too concerned about it. The more important
number is the recent low of 2728 made on 11 Oct. A retest of that level might give us some
idea about the future direction of the markets.
Frankly, I’d rather we just bounce up from here and get this weakness
over with, but that may not be the course the markets will take.
A second close below the 200-dMA (2768) would be bearish,
but it would be unfortunate to bail out of stocks only to watch the markets
turn around and go up after testing the prior low of 2728. So, I will wait for
the retest and decide then.
Overall, my daily sum of 17 Indicators slipped from -2 to
-4 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations dipped from -53 to -54. On
the big scheme of things, not much change.
Now, it looks more likely that we’ll retest the prior low
of 2728 or will investors change their minds and we’ll see a turn-around
Tuesday (a frequent reversal day)? We’ll know soon.
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…
INTEL UPGRADED (CNBC)
“-Nomura Instinet upgrades Intel shares to buy from
neutral.
-It says the company is the only chip stock that
will raise estimates in October and November.
-Nomura maintains its Intel price target of $50 a share.”
Story at…
MONDAY 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 - SELL
Monday, the Price
indicator was positive; Sentiment was neutral; Volume & VIX indicators were
negative. Overall this is a NEGATIVE indication that suggests reducing stock
allocations, but we are watching the charts and will examine the numbers if we
have a retest of the prior low.
