“Led by improvements in employment-related indicators,
the Chicago Fed National Activity Index (CFNAI) increased to +0.24 in October
from +0.14 in September. Only one of the four broad categories of indicators
that make up the index increased from September, but three of the four
categories made positive contributions to the index in October. The index’s
three-month moving average, CFNAI-MA3, ticked up to +0.31 in October from +0.30
in September.” Press release at…
CONSUMER CONFIDENCE (Bloomberg)
“U.S. consumer confidence fell in November for the first
time in five months, cooling from an 18-year high, as optimism dimmed for
business conditions and incomes.” Story at…
My cmt: Nothing like a stock market correction to make
consumer confidence drop.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.3% to 2682.
-VIX rose about 0.6% to 19.02.
-The yield on the 10-year Treasury was up to 3.062%.
Based on the new-high/new-low reversal that occurred
Wednesday of last week, we now have a more bullish stance on the market. Charts
and internals are improving too. This all suggests that Friday was the bottom
of this correction (or close to it). Today, nothing is different that would
change my mind.
I am now at fully invested position plus about 10% extra
invested since I think we made a bottom last Friday.
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
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 increasing to 60% invested in stocks Tuesday. For
me, fully invested is a balanced 50% stock portfolio so this is slightly
higher. I will cut back to 50% if/when we reach the old highs.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the Price
indicator was positive; Volume and Sentiment indicators were neutral; the VIX
indicators were negative. Overall this is a NEUTRAL indication. This indicator is slow to turn so it is not a concern that it is only neutral.
