“The U.S. economy slowed in the third quarter as
previously reported…Gross domestic product increased at a 3.5 percent
annualized rate, the Commerce Department said on Wednesday in its second
estimate of third-quarter GDP growth.” Story at…
NEW HOME SALES (BondBuyer)
“Sales of new U.S. homes fell in October to the weakest
pace since March 2016 as rising borrowing costs and elevated prices keep buyers
out of the market.
Single-family home sales fell 8.9% from the prior month
to a 544,000 annualized pace…” Story at…
CRUDE INVENTORIES (OilPrice.com)
“Crude oil prices slipped further down today after the
Energy Information Administration reported crude
oil inventories for the week to November 23 had added 3.6 million barrels.
That’s compared with a build of 4.9
million barrels a week earlier.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 2.3% to 2744.
-VIX dipped about 3% to 18.49.
-The yield on the 10-year Treasury dipped to 3.035%.
Correction Over: Based on the new-high/new-low reversal
that occurred Wednesday of last week and better market data at the Friday low
(compared to the prior low), we have a more bullish stance on the market. Since
the Friday bottom, we’ve seen 3 straight days of late-day buying when the Pros
are active; the S&P 500 is up over 4% in 3-days; improving indicators;
falling utilities; improving new-highs; and other signs that tend to confirm
that Friday was the bottom of this correction.
As of Tuesday, I went from 30% invested in stocks to
fully invested in stocks plus about 10% extra since I think we made a bottom
last Friday.
Today (Wednesday) 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.
My daily sum of 17 Indicators improved from -5 to zero (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations slipped from -61 to -62.
In summary: “Looking good Billy Ray! Feeling good Lewis!”
MOMENTUM ANALYSIS:
(Momentum analysis is not useful in a selloff, but
since we are coming off the bottom (I think) we may begin to use this data
again.)
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
Neutral on the market, but improvements to the numbers do support the belief that the bottom was Friday.
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 stock allocations 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
depending on indicators.
INTERMEDIATE / LONG-TERM INDICATOR
Wednesday, the
Price indicator was positive; Volume and Sentiment indicators were neutral; the
VIX indicators were negative. Overall this is a NEUTRAL indication, but
improvements to the numbers do support the belief that the bottom was Friday.
