“U.S. retail sales barely rose in September as a rebound
in motor vehicle purchases was offset by the biggest drop in spending at
restaurants and bars in nearly two years. But other details of the report from
the Commerce Department on Monday were upbeat…“The net result still appears to
be a fairly strong quarter for consumer spending growth,” said Jim O’Sullivan,
chief U.S. economist at High Frequency Economics in White Plains, New York.”
Story at…
EMPIRE MANUFACTURING (FXStreet)
"Business activity continued to grow strongly in New
York State, according to firms responding to the October 2018 Empire State
Manufacturing Survey," the Federal
Reserve Bank of New York said on Monday.” Story at…
CORRECTION OVER? (Marketwatch)
“Awful start to the final quarter bodes ill for remainder
of the year…
After a nail-biting week with the Dow Jones Industrial
Average sinking nearly 1,400 points over two sessions, the jury is still out on
whether the selloff signals a fundamental shift in the stock market or a brief
episodic correction…it’s worth noting that the historic crashes of 1929, 1987,
and 2008 happened in October and things could get even more choppy this year
due to a number of factors, according to Jeff Hirsch, editor of the Stock Trader’s
Almanac. “We may get some more downside this year than the average October, but
with all the midterm machinations, Fed activity, frothy sentiment and rich
valuations that is understandable,” he wrote in a recent blog post.” Story at…
My cmt: Perhaps, but near term I think we’ll see a
bounce.
JEFFREY SAUT COMMENTARY EXCERPT (Raymond James)
“It is unbelievable to us that investors are listening to
pundits that NEVER saw the decline coming, yet now want to tell us why the
decline happened…We are unconcerned with “probabilities” that stocks will trade
at X-times this or that projected earnings estimate since all that is important
is the primary trend of the equity markets; and, the primary trend remains UP.”
Full commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dropped about 0.6% to 2751.
-VIX was little changed at 21.30.
-The yield on the 10-year Treasury dipped slightly to
3.160% as of 55.
I wrote previously, “There are so many signs that the
markets are significantly oversold that a bounce up looks like the most likely
move next week.” That’s still true and now “next” week is this week.
We were down today on the S&P 500, but market
internals improved. 58% of the volume was up; 59% of stocks advanced; the
number of new-lows improved significantly, too. I think this suggests we’ll see
a bounce very soon, if not Tuesday.
Still, bearish signs remain…
-The 5-10-20 Timer system is a sell. (This is a simple
crossover system that is a “sell” when the 5-dMA and 10-dMA’s are below the
20-dMA.)
-Late day action (the Smart Money) continues down.
-Money Trend is falling sharply.
-VIX is bearish.
Overall, my daily sum of 17 Indicators improved a bit,
from -9 to -8 (a positive number is bullish; negatives are bearish) while the
10-day smoothed version that negates the daily fluctuations actually improved
from -44 to -47.
Trend changes are loosely defined by successive closes
below the trendline or a fall 3% below the trendline. In this case the trendline is the 200-dMA. The
S&P 500 slipped below its 200-day moving average (200-dMA) again today. If
it closes below the 200-dMA tomorrow (Tuesday), it may be time to cut stock
allocations, depending on other indicators. I still expect a bounce.
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…
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
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).
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 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.
