EMPIRE STATE MANUFACTURING (MarketWatch)
“The New York Fed’s Empire State business-conditions
index fell to a reading of 3.7 in March from 8.8 in the prior month…growth is
quite a bit slower so far this year than in 2018…A slowdown in China’s
manufacturing sector was seen as the leading culprit.” Story at…
INDUSTRIAL PRODUCTION (MarketWatch)
“Industrial production edged up 0.1% in February…the gains
were concentrated in utility output and mining. Manufacturing fell 0.4%, the
second straight monthly decline. …”
Story at…
SENTIMENT (FoxBusiness)
“U.S. consumer confidence rose at the beginning of
March, a sign that consumers may be feeling more optimistic than they did to
start the year.” Story at…
JOLTS (CNBC)
“Job vacancies jumped to a fresh high of 7.6 million in
January as employers continue to seek qualified applicants to fill positions,
the Bureau of Labor Statistics reported Friday.” Story at…
PAUL SHATTZ COMMENTARY EXCERPT (Heritage Capital)
“Given the run we have had this week, coupled with
negative seasonality next week, my initial take is that stocks are not going to
run away from here…However, even if stocks pause here or mildly pullback, I
don’t think it will be enough to warrant much action. There is too much
strength beneath the surface…Bull markets do not end with behavior like this.” –
Paul Schatz, President Heritage Capital. Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.5% to 2822.
-VIX dropped about 5% to 12.88.
-The yield on the 10-year Treasury slipped to 2.592%
There was extreme volume associated with the Triple
Witching expiration of options Friday.
Friday was a statistically significant up-day at mid-day.
That just means that the price-volume move exceeded my statistical parameters. That
would have been the fifth statistically significant move in the last 10-trading
sessions. That sort of back and forth
big-move trading usually happens at a top or a bottom; but there was some late
day selling (all afternoon actually) that negates this particular indicator
since the S&P 500 didn’t advance far enough. I don’t have stats on partial statistically-significant
days.
-Bollinger Bands were just shy of issuing an oversold
indication. Perhaps that spooked the buyers.
-Breadth is 51% indicating that over the past 2-weeks
more than 50% of stocks have been up on the NYSE. That’s generally a positive
sign, but some measures of breadth are falling sharply and this needs to be watched.
-The Pros are still selling as evidenced by late-day
action.
-We noticed high unchanged-volume 2 out of the last 4 days.
Some analysts believe this indicates a top since it suggests investor
confusion. That sounds logical, but I
never found a very strong correlation. Sometimes it’s right and sometimes it’s
wrong.
-MACD may make a bullish crossover soon. We’ll see if that happens next week.
-Money Trend is positive.
My daily sum of 20 Indicators rose from +3 to +4 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations declined from +10 to +9. This remains
mostly bullish, but the stall in indicators may suggest a turn in the markets
next week.
I still haven’t managed to increase my percentage of
stock investments. Let’s see if there is
a rough patch coming for stocks.
The Index is fighting resistance around the 2820
level. Today we got a bit higher. I have
waited so long to get back in, there’s no need to rush now.
My experience with this rally has been just another
lesson of: “Follow your indicators!” It just seemed impossible that there would
not be a retest of the December low; it could still happen, but I am getting
tired of betting that it will. I am not short the market, but I have lost
opportunity cost associated with being mostly out. Of course, this is exactly the reason I leave
30% in the market. I have been wrong about a retest, but I have still made
money on the rally.
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…
FRIDAY 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
Friday, the PRICE
and VIX indicators were positive. The VOLUME and SENTIMENT indicators were
neutral. Overall this is a BULLISH indication. I remain defensive for the time
being depending on market action.
