“U.S. productivity rose at 2.2% annual pace in the third
quarter after a strong gain in the spring, marking the best back-to-back
performance in four years in a good sign for the economy.” Story at…
JOBLESS CLAIMS (MarketWatch)
“The weekly number of Americans losing their jobs fell
slightly in late October and clung near the lowest level in decades. Initial
jobless claims, a rough way to measure layoffs, fell by 2,000 to 214,000 in the
seven days ended Oct. 27…” Story at…
ISM MANUFACTURING (PeoplesPundit)
“The Institute for Supply Management (ISM) manufacturing
index (PMI) came in at 57.7%, a slight easing but still indicative of solid
sector growth.” Story at…
AUTO SALES (Reuters)
“U.S. auto sales rose slightly in October, hit by rising
interest rates and higher vehicle prices, and No.2 carmaker Ford Motor Co. (F.N)
warned of slipping consumer confidence, indicating sales volumes would continue
to moderate in 2018.” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 1.1% to 2740.
-VIX dropped about 9% to 19.34.
-The yield on the 10-year Treasury sipped to 3.133% as of
4:34 pm.
Volume remained strong today, about 15% above the monthly
average. It’s a nice bullish sign,
because it suggests conviction continues behind the move up in the Index. We had a
selling stampede now we have a buying stampede.
69% of the total volume was up-volume today and 75% of
stocks advanced. These numbers are higher than any day this week so buying has
been accelerating somewhat.
My Money Trend indicator remains bullish. In addition, we
saw late-day buying today and a bullish closing-tick (sum of last trades of the
day) of +246.
My daily sum of 17 Indicators improved from -3 to zero (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -42 to -36.
The 200-dMA is now 2765 and that is a major resistance
point. The rally needs to break above S&P 500 the 200-dMA for this rally to
continue.
Today is trading day 30 for this pullback. The drop is
now 6.5% (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.
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.
I remain bullish in the short-term.
MOMENTUM ANALYSIS:
(Momentum analysis is not useful in a selloff. As an
example, Proctor and Gamble was 16th last week – now because of a
flight to safety - it is #2. If the
downturn ends, it will drop quickly 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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained Neutral.
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
indicator was positive; Volume and Sentiment were neutral; the VIX indicator was
negative. Overall this is a NEUTRAL indication.
