“The Conference Board Leading Economic Index® (LEI) for
the U.S. declined 0.1 percent in January (according to preliminary
estimates) to 111.3 (2016 = 100), following no change in December, and a 0.1
percent increase in November…"In January, the strengths in the financial
components were offset by the weaknesses in the labor market components. The US
LEI has now been flat essentially since October 2018.
The Conference Board forecasts that US GDP growth will likely decelerate to about
2 percent by the end of 2019." – Conference Board. Press release at…
Note: “…due to the recent government shutdown, data for
three US LEI components - manufacturers' new orders for consumer goods and
materials, manufacturers' new orders for nondefense capital goods excluding
aircraft and building permits - were not available for several of the recent
months. The Conference Board has used its standard procedure of statistical
imputations to fill in the missing data in order to publish a preliminary
Leading Economic Index. The Conference Board will be issuing an interim release
on March 4th, once these data are published.” – Conference Board.
PHILLY FED (MarketWatch)
“The Philadelphia Fed manufacturing index in February
dropped sharply into negative territory. The index fell to a seasonally
adjusted reading of -4.1 from 17 in the prior month. This is the first negative
reading since May 2016…The sharp drop fits with other manufacturing data
suggesting the U.S. is now succumbing to the global industrial downturn. The
Empire State index rebounded in February but remained close to a two-year low.
The flash U.S. manufacturing PMI fell to the
worst level in 17 months.” Story at…
My cmt: A number below zero indicates “worsening
conditions.”
DURABLE ORDERS (Reuters)
“New orders for key U.S.-made capital goods unexpectedly
fell in December amid declining demand for machinery and primary metals,
pointing to a sustained slowdown in business spending on equipment that could
further crimp economic growth…The Commerce Department said orders for
non-defense capital goods excluding aircraft, a closely watched proxy for
business spending plans, dropped 0.7 percent. Data for November was revised
down to show these so-called core capital goods orders falling 1.0 percent
instead of declining 0.6 percent as previously reported.” Story at…
JOBLESS CLAIMS (Reuters)
“The number of Americans filing applications for
unemployment benefits fell last week, but the four-week moving average rose to
a more than one-year high, suggesting the labor market was slowing down. Initial
claims for state unemployment benefits dropped 23,000 to a seasonally adjusted
216,000 for the week ended Feb. 16…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.4% to 2775.
-VIX rose about 3% to 14.46.
-The yield on the 10-year Treasury rose to 2.698%.
My daily sum of 18 Indicators improved from +6 to +8 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dipped from +76 to +71. Overall, this
indicator is somewhat bearish since the longer-term value is falling.
Late day action was up today, however, the 20-dMA of
late-day action continues down. It suggests the Pros are beginning to doubt the
rally can go higher without some sort of retracement or consolidation.
I’m reluctant to jump back in when markets are getting
very over-stretched. I hope to identify a better entry point to get back in the
market. The Index is now 1% above the 200-dMA.
A full retest of the Christmas Eve low seems unlikely
now, but it could still happen. Only a retest at the 2351 level, or a climb
back above the old highs, will tell us whether 2351 was THE bottom.
MOMENTUM ANALYSIS:
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 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
Thursday, the VIX
and PRICE indicators were positive. The SENTIMENT and VOLUME indicators were
neutral. Overall this is a POSITIVE/BULLISH indication. I remain defensive,
expecting some sort of pullback.
