“On Thursday, the Federal
Reserve kept interest rates unchanged in a range of 2%-2.25%. Following
this policy announcement, Fed chair Jay Powell did not meet with reporters to
answer questions on the thinking behind the Fed’s decision.” Story at…
JOBLESS CLAIMS (Reuters)
“New applications for U.S. unemployment fell slightly
last week and the number of Americans receiving benefits remained at a 45-year
low as strong labor market conditions continued. Initial claims for state
unemployment benefits dropped by 1,000 to a seasonally adjusted 214,000 for the
week ended Nov. 3…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 slipped about 0.3% to 2807.
-VIX rose about 2% to 16.72.
-The yield on the 10-year Treasury rose to 3.24% as of 4:37
pm.
After we saw a 2%+ day up yesterday, the small pullback
today looks bullish to me. I would have expected more profit taking. Volume was
about 10% of he monthly average, so there was not a lot of participation in the
selling today. While low volume to the upside after a bottom doesn’t mean much,
low volume on a down-day after a bottom suggests less selling pressure and
that’s a good thing.
The continued positive spread in the 52-week,
new-high/new-low data is a very good sign.
Today, new 52-week highs outpaced lows 75 to 69.
It appears that the Index broke back above the long-term
trend line from Feb 2016 on Wednesday and that’s a good sign, though it does
depend on the scale one uses to draw these lines. The Index remained above the
trendline Thursday. In theory, that suggests the downtrend has been broken. Now
we have to watch and hope that the Index will remain above the trend line. (Today,
my measurement of the trendline is 2800.) If the Index does remain above it,
this correction will be over. Further, the
Index is sitting just below its 100-dMA. A move up through the 100-day would be
very bullish.
The S&P 500 closed 1.6% above its 200-day moving
average (d-MA).
My Money Trend indicator remains bullish and gave a very
bullish reading on today’s down day – good news.
Again, today we saw strong late-day buying, and that’s a
bullish sign, too. Closing Tick (last trades of the day) was a bullish +493. Late-day action and strong positive tick
suggests that the Pros think this rally is going higher.
About the only bearish indicator of note was the
Overbought/Oversold Ratio. It is now overbought. This indicator is always early so I generally
ignore it until we have confirmation from other indicators.
My daily sum of 17 Indicators slipped from +7 to +5 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -4 to +1.
Today is trading day 35 for this pullback counting from
the top. The drop from the top is now 4.2% (9.9% max) so we are more than half
way back to the top. (These numbers are based on closing data.) Over the last
10-years, for drops less than 10%, the average time from top to bottom has been
32-days to a final bottom, including a retest. (The low is usually at the
retest.) Except for major crashes, the average correction was about 12% and
lasted 53 trading-days including retests. We can’t say for certain that this
correction is over unto the market makes new highs.
We are still watching for a possible re-test the prior
low of 2641. I plan to watch indicators, especially VIX and Money Trend, to see
if they may give us some indication of whether to hold on or cut back stock
holdings.
I may just cut some stock holdings just to limit risk if
the Index does begin to slip down. We’ll see.
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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained Positive 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 - HOLD
Thursday, the Price
& Volume indicators were positive; Sentiment was neutral; the VIX indicator
was negative. Overall this is a NEUTRAL indication.
