J.P. MORGAN COMMENT FOR 2019
“While equity valuations are much cheaper after the fall
selloff, tighter monetary policy, shrinking excess capacity, slower global
growth and unresolved trade issues will limit the market rebound in 2019. While
we expect US GDP and profits to continue to rise, they don’t always translate
into rising asset prices this late in the cycle, particularly with the shift by
the Trump administration away from its market-friendly 2017 policies.” – J.P.
Morgan
HOME SALES (MarketWatch)
“Existing-home sales ran at a seasonally adjusted annual
rate of 4.99 million in December, the National Association of Realtors said Tuesday.
That was the lowest since November 2015. Sales were down 6.4% for the month,
and 10.3% lower than the year-ago rate.” Story at…
JEFFREY SAUT COMMENTARY EXCERPT (Raymond James)
“…in the short term, the equity markets have gone from
extremely oversold to extremely overbought in one of the shortest times in
history…Therefore, even though the SPX has exceeded our upside target range
(2600-2650), we are sticking with our more cautious investment stance at these
levels.” – Jeffrey Saut. Commentary at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 1.4% to 2633.
-VIX rose about 17% to 20.80.
-The yield on the 10-year Treasury was dipped to 2.740%.
We said Friday, that Friday was probably a Top, based on
the evidence. Today, it looks like a lot of other people came to the same conlcusion.
Tuesday was a Statistically-Significant down-day. That
means that the price-volume move exceeded my statistical parameters. Stats show that an up-day occurs in the next
trading session about 60% of the time after a statistically significant down-day.
My Money Trend indicator is still headed down and that’s
a bearish sign . (This indicator attempts to follow the general concept of Lowry
Research and their supply and demand methodology for stock market analysis.
Their concept is based on a detailed stock-by-stock analysis while mine is an
estimate based on readily available Macro data.
Theirs is much more accurate, but that doesn’t mean mine isn’t useful.)
My daily sum of 17 Indicators declined from +7 to +1 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations declined from +86 to +77. I tend to
watch the direction of this indicator and for now it is headed down, a bearish
sign.
Today there were a lot more negative indicators and
that’s not a good sign for the bulls. Repeating
what I’ve been saying for a while:
A “V”-bottom is very unusual and I don’t think it is
likely that this correction will race to a top without a retest of the prior
low at 2351. I sold the rally and cut my stock holdings back to about 30%, 9
January to reduce risk. (The Index is up about 3% since then.)
Only a retest at the 2351 level, or a climb back above the old highs
(not likely without a retest), will tell us whether 2351 was THE bottom.
MOMENTUM ANALYSIS:
(Momentum analysis is suspect in a selloff, so I‘d be
careful using momentum data for the time being – the only reason utilities are
highly ranked among ETFs is as an alternative to stocks during the correction.) The same is true for individual stocks in the
Dow 30.
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
dropped to 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).
My current stock allocation is about 30% invested in
stocks on as of 9 January 2019. For me, fully invested is a balanced 50% stock
portfolio so this is a very conservative position.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the Sentiment
and Volume indicators were positive; The Price and VIX indicators were neutral.
Overall this is a POSITIVE indication, BUT IT MAY BE TOO EARLY to Buy now since
we expect a retest of the low. It does
indicate that conditions have greatly improved. Bullish Sentiment is based on
the short-term/intermediate version of this indicator. The longer-term version is neutral for
Sentiment so longer term, the Indicator is Neutral.
