RETAILS SALES (Reuters)
“U.S. retail sales rose modestly in January after a
December drop that was even larger than originally estimated, but the recovery
was not seen strong enough to alter the course of a U.S. economy that was
losing momentum in early 2019… January’s increase in retail sales recouped only
a fraction of December’s plunge, leaving expectations for a slowdown in
consumer spending in the first quarter intact.” Story at…
DOUBLE DIGIT EARNINGS DECLINE FOR COMPANIES WITH HIGH
GLOBAL EXPOSURE (FactSet)
“The estimated earnings decline for the S&P 500 for Q1
2019 is -3.4%. For companies that generate more than 50% of sales inside the
U.S., the estimated earnings growth rate is 1.0%. For companies that generate
less than 50% of sales inside the U.S., the estimated earnings decline is
-11.2%.” Analysis at…
JOBS REPORT - RECESSION AROUND THE CORNER? (Advisor Perspectives)
Charts and commentary at…
BILL GATES: “This
is one of my favorite infographics. A lot of people underestimate just how much
life has improved over the last two centuries: https://b-gat.es/2S23hlG “
From…
BONDS ARE SIGNALING BUY (CNBC)
“The S&P 500, Dow and Nasdaq just had their
worst week of the year with all three down for a fifth day in a row. That’s the
first time all the indices have been down every day of the week since November
2016…‘When you take the bond market’s message as a whole, I think it’s about as
optimistic as the big recoveries we’ve had in stocks and commodities so far,’
he [Jim Paulsen, Chief Investment Strategist of The Leuthold Group, LLC.] said.”
Story at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 jumped about 01.3% to 2783.
-VIX fell about 14% to 14.33.
-The yield on the 10-year Treasury rose to 2.643%
The WSJ reported that Friday’s bad China export numbers
had a lot to do with the timing of the Chinese New Year. The date of the New
Year slides annually making year-over-year comparisons difficult. Per the WSJ, the experts say that the decline
in China exports is probably more on the order of 5% rather than the 20%
decline reported Friday. That is still a worrisome number. However, one wonders
if the data was bad, why were Shanghai traders fooled so badly? The Shanghai
Composite index was down 4.4% on Friday and another 2.6% today. Hmmm. Maybe the
folks in-the-know think the data was really
bad.
Today was a statistically significant up-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically significant up-day is followed by a down day about
60% of the time. That is the fifth statistically significant move in the last
16-trading sessions. That usually happens
at a top or a bottom so today’s move could be further evidence of exhaustion
for the rally.
Internals were good today and that bumped a number of my
indicators higher. My daily sum of 20 Indicators rose from -6 to +1 (a positive
number is bullish; negatives are bearish) while the 10-day smoothed version
that negates the daily fluctuations dropped from +14 to +4. This is a neutral
to slightly bearish indication.
It looks like the rally is trying to stay alive. Today the
S&P 500 jumped up and is 1.2% above the 200-dMA. Maybe the rally
still has legs?
For the time being, we know that the economy is slowing
and possibly quite rapidly. A slowing
economy probably doesn’t support prices that we saw at the September highs
given that earnings are expected to fall next quarter. That’s what I
think. We’ll have to watch the
indicators to determine if they show us something different. There seem to be a few credible bullish calls
recently, including the Jim Paulsen call linked above.
Only a retest at or near the 2351 level, or a climb back
above the old highs (not likely any time soon), 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…
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
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
Monday, the PRICE and
VIX indicators were positive. The VOLUME and SENTIMENT indicators were neutral.
Overall this is a NEUTRAL indication. I remain defensive, expecting some sort
of pullback.
