JEFFREY SAUT COMMENTARY EXCERPT (Raymond Jmaes)
“…the S&P 500 (SPX/2822.48) closed above its March 4,
2019 intraday reaction high of 2816.88 last week, causing many pundits to
suggest an upside breakout. I am not so sure and continue to use the 2800 –
2830 zone as the valid upside resistance zone. Last week was the fourth attempt
to better that zone. Our work shows another “polarity flip” due this week with
the potential of a pause, or a pullback attempt, which should be small.” Fulle
commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.4% to 2833.
-VIX rose 2% to 13.1. (The options Boys are betting
against the rally today.)
-The yield on the 10-year Treasury rose to 2.602%
Today, Bollinger Bands gave an oversold indication. The
last time that happened was at the September high before the 20%, 2018 correction. RSI is not oversold. I like to use these
indicators together. Further, I don’t see the other negative signs that were
present in Sept 2018, so I don’t expect a big drop now, but we do see some
negative signs.
My Breadth vs the S&P 500 indicator is getting
stretched. That is a good topping
indicator, though it hasn’t called a top yet. Some measures of longer-term
breadth (% of stocks advancing on the NYSE) are very stretched and have
exceeded values at the top of the 16%-correction in 2010. Late day action was
positive today, but the Pros are still selling as evidenced over the longer
term.
On the bullish side, MACD almost made a bullish crossover
today and Money Trend remains positive.
My daily sum of 20 Indicators slipped from +4 to +3 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from +9 to +12. This remains
mostly bullish, but the stall in indicators may suggest a turn in the markets this
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.
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…
MONDAY 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
Monday, 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.
