ADP EMPLOYMENT (BusinessInsider.com)
“Private employers added 129,000 payrolls last month, ADP
said Wednesday, the slowest pace of job growth in 18 months. The report raised concerns
that official employment data out Friday could fall short of expectations.
In February, the US added the
fewest private and public sector jobs since 2017.” Story at…
ISM MANUFACTURING (Bloomberg)
“A gauge of U.S. service industries fell in March by more
than expected to the lowest level since mid-2017 amid weaker business and new
orders, adding to signs economic growth is cooling this year. The Institute for
Supply Management’s non-manufacturing index dropped to 56.1…”
My cmt: A number above 50 is still expansion; just at a slower
rate.
CRUDE INVENTORY (OilPrice.com)
“Crude oil prices fell today after the Energy Information
Administration reported an inventory increase of 7.2 million barrels for the
week to March 29. This compared with a 2.8-million-barrel build
in oil inventories in the previous week. Right now, inventories are
slightly below the seasonal average…” Story at…
My cmt: Oil prices remain important because a large part
of the S&P 500 is based on oil related companies and services.
JOHN HUSSMAN Commentary excerpt (Hussman Funds)
“I continue to believe that September 20, 2018 marked the
most likely peak of the recent bull market, and that the recent advance most
likely represents an aging bear market rally, with steep full-cycle market
losses being inevitable. It’s also important to observe the similarity of the
recent advance to the short-lived clearing rallies of early-2001 and
early-2008, both which restored borderline market internals before failing.”
John Hussman, PhD. Full commentary at…
My cmt: I’ve always appreciated John Hussman’s rigorous
analytical approach to markets, but I think he places too much importance on
Valuation. With more people chasing fewer stocks, it is not surprising that valuations
are at extreme levels.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 0.2% to 2873.
-VIX rose about 3% to 13.74.
-The yield on the 10-year Treasury rose to 2.521%.
“Trading what I see,” still has me doing nothing. That’s
because the long-term indicator remains neutral. If we were in a better bullish
situation, the long-term indicator would be positive/bullish. I’ve doubted this
rally the whole way; I have been wrong, but it is still very hard to get back
in the market at a higher %-stocks.
Head and Shoulders Top Pattern?
One of the most widely followed chart patterns is the “Head-and-Shoulders.”
We have a possible set-up now. The left shoulder is S&P 500, 2873 on 26 Jan
2018. The Head is the all-time high at 2931 on 20 Sept 2018. The right shoulder
is today’s value (matching the left shoulder) at 2873. (The chart below shows
the head and shoulders pretty well.) My volume indicator is a variant of OBV (on
balance volume). My value for OBV declined at the Head and declined further at
the Right shoulder. This is the set-up
as described at…
Importantly, we do not yet have a confirmation of the
pattern, because we would need to see declines from the Right shoulder – we need
to drop from here. Will the pattern worry traders? We may find out in the next
several days.
The Elliott Wavers are predicting a drop below the
December 2018 low once the current “B”-wave is completed, at least that was the
thinking as of last weekend.
Discussion and chart at…
Still, there are hardly any bear signs today in my
indictors:
-The overbought/oversold ratio is oversold. This is an old school indicator that is
usually early so I don’t pay much attention to this one.
-Bollinger Bands are nearly
overbought, but not there yet.
My daily sum of 20 Indicators improved from +8 to +10 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations slipped from +10 to +13. Most of
these indicators are short-term.
There aren’t many bear signs. I remain in the confused
camp. I’d like to see the Long-term indicator and the Short-term internals
indicator both positive so I can increase my percentage invested in stocks.
We have noted some slowing momentum. The way I draw the trend lines it looks like
the Index is at its upper trend line. Trend lines have flattened after the
steep run-up. Some lower prices would be expected near-term.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10
Today’s Reading: Zero (Solidly Neutral.)
Most Recent Day with a value other than Zero: 21 March
2019 value = -1
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or better is a Buy
Sign.
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…
DowDupont spun off DuPont and is now Dow Chemical and
will remain in the Dow Industrial Index trading symbol, DOW.
“Dow’s separation has been in the works since Dow
Chemical Co. and DuPont Co. agreed to merge, temporarily creating the world’s
largest chemical company. The plan from the start was to redivide into three
new companies focusing on commodities, agriculture and specialty products.”
Story at…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
to POSITIVE 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 as of 9 January 2019.
INTERMEDIATE / LONG-TERM INDICATOR
Wednesday, the
PRICE indicator was positive. The VOLUME, VIX and SENTIMENT indicators were
neutral. Overall this remains in a NEUTRAL indication.
