FED BEIGE BOOK (MarketWatch)
“Most of the Federal Reserve’s 12 district banks reported
economic activity expanded at a “slight-to-moderate” pace in March and early
April, according to the Federal Reserve’s Beige Book report, released
Wednesday. A “few” districts reported some strengthening in
activity.” Story at…
CRUDE INVENTORIES (OilPrice.com)
“Crude oil prices inched higher after the Energy
Information Administration today reported a
1.4-million-barrel crude draw, accompanied by a draw in gasoline stockpiles.”
Story at…
CHINA DATA POSITIVE (MarketWatch)
“Treasury yields inched higher Wednesday as a round of
upbeat Chinese economic data increased appetite for risk assets and triggered a
selloff in government bonds across the U.S. and Europe.” Story at…
My cmt: This is good news because many of the US
recession concerns recently have been fed by worries over weakness in the Chinese
economy.
STILL BULLISH (Heritage Capital)
“While I have written about some recession concerns, the
credit markets are not showing any worries. High yield bonds just keep making
new highs day after day and week after week. Long before stocks peak and well
before the economy peaks, I fully expect the junk bond market to put in a major
high. We’re not even seeing junk bonds peak yet, so I have to laugh at all
those Chicken Littles out there who yell that the U.S. economy has been in
recession for months. That’s just not the case.” - PAUL SCHATZ,
PRESIDENT, HERITAGE CAPITAL. Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped about 0.2% to 2900.
-VIX rose about 3% to 12.60.
-The yield on the 10-year Treasury dipped slightly to
2.590%.
Volume was about 5% above the monthly average today. That’s
not telling us much. If we were to see a pullback, volume would increase. We
did note that volume was about 10-15% below normal for about 3-weeks and that
sort of weakness does suggest some sort of slip in the S&P 500 Index. It’s
not a great indicator, though, so it’s not clear if the Index has made a
short-term top.
The overbought/oversold ratio slipped to neutral.
RSI remained overbought at 82. The Index is now more than 1% below the upper
Bollinger Band so chances that we’ll see an overbought indication in the Bollinger
Bands are low for now. If Bollinger
Bands were to go negative along with RSI, we would expect a decent buying
opportunity.
My daily sum of 20 Indicators improved from -4 to -2 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from +28 to +16. Most of
these indicators are short-term.
I am bullish now, but still looking for a better entry
point. I expect the market direction to be down (overall) for a bit. Mr. Market
has not agreed with me. We’ll see.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10
Today’s Reading: -1 (RSI is overbought.)
Most Recent Day with a value other than Zero: -1 on 17
April (RSI was negative.)
(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…
WEDNESDAY 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 as of 9 January 2019.
INTERMEDIATE / LONG-TERM INDICATOR
Wednesday, the VIX, VOLUME, PRICE and SENTIMENT
indicators were neutral. Overall this is a NEUTRAL indication.
