“Executives at service-oriented companies such as banks,
hotels and hospitals said the economy continued to run strong in October,
according to a new survey. The non-manufacturing index compiled by the
Institute for Supply Management slipped to 60.3 last month from 21-year high of 61.6 in
September.” Story at…
HUSSMAN MARKET COMMENT EXCERPT) (Hussman Funds)
“October’s market decline was a rather mild warning shot.
At its lowest close, the S&P 500 lost -9.9% from its September peak, before
rebounding in recent sessions. As I noted during the 2000-2002 and 2007-2009
collapses, intermittent “fast, furious, prone-to-failure” rebounds are among
the factors that encourage investors to hold on through the entirety of major
declines. After particularly severe down-legs in the market (which we have not
yet observed), these rebounds can extend for weeks, and sometimes approach
gains of as much as 19% before the market plunges again.” – John Hussman, PhD.
Full comment at…
JEFFREY SAUT COMMENTARY EXCERPT (Raymond James)
“…We think the “lows” are in, but the ideal bottoming
process would be a rally into the 2800 – 2820 zone followed by a pullback to
the 2600 – 2650 level.” Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.6% to 2738.
-VIX rose about 2% to 19.96. (The Options Boys seem to
think there’s more downside ahead.)
-The yield on the 10-year Treasury slipped to 3.199% as
of 4:24 pm.
Volume was down a bit today with total volume about 10%
below the monthly average. It may indicate that the bounce is running out of
steam. I’d like to see the bounce get to the 100-dMA, but that may not happen.
My Money Trend indicator remains bullish.
Today we saw late-day selling, a negative sign, but there
was a positive closing-tick (sum of last trades of the day) of +123 so there’s
a mixed bag on the late-day action.
My daily sum of 17 Indicators improved from zero to +2 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -34 to -28.
Today is trading day 32 for this pullback counting from
the top. The drop from the top is now 6.6% (9.9% max). (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.
Repeating: It’s tug of war time between the positive
calendar (November is a bullish month) vs. the tendency for corrections to
retest their lows. We still can’t say which side will win or if the correction
is over. My guess is that it is slightly more likely for the correction to
re-test, so we may see the 2641 low again. Retests are usually successful and
markets go up. Of course, if this is the
“big one” the test will fail and we’ll see selling resume. It may make sense to
reduce stock holdings some as the markets recover. I plan to watch indicators
and make a decision later.
For now, I think the market can go higher before it slips
back for a retest. That’s mostly a guess. I remain cautiously bullish in the
short-term.
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 switched
to 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
Monday, the Price
indicator was positive; Volume and Sentiment were neutral; the VIX indicator
was negative. Overall this is a NEUTRAL indication.
