GDP (NYTimes)
“Rumors of the economic expansion’s death appear to have
been greatly exaggerated. Gross domestic product, the broadest measure of goods
and services produced in the economy, rose at a 3.2 percent annual
rate in the first three months of the year, the Commerce Department said
Friday.” Story at…
My cmt: Well, this is odd isn’t it. We’ve been hearing about a slowdown (with
backup evidence, particularly in manufacturing) for what seems like months and
now we get a very strong GDP number? See the following, “The Real Economy
Slumped,” from MarketWatch:
THE REAL ECONOMY SLUMPED (MarketWatch)
“The economy isn’t doing nearly as well as that 3.2%
annual growth rate for gross domestic product reported Friday by the Commerce Department. The heart of the real economy —
private-sector consumption and investment — slowed sharply in the first quarter
to a 1.3% annual rate, the slowest in nearly six years…“First-quarter GDP is
3.2%, but the underlying data is much weaker and is consistent with a slowing
economy,” said Jason
Furman, former economic adviser for President Obama and a professor
at Harvard University.” Story at…
CONSUMER SENTIMENT (Bloomberg)
“The University of Michigan's final April sentiment index
dropped to 97.2 from 98.4 in March, topping the preliminary reading of 96.9 as
well as the forecast in Bloomberg’s survey.” Story at…
ETERNAL BULLISHNESS & WILLFUL BLINDNESS (excerpt)
(RIA)
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.5% to 2940, a new all-time high.
-VIX dipped about 4% to 12.73.
-The yield on the 10-year Treasury dropped to 2.500%.
My daily sum of 20 Indicators improved from +2 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 -6. Most of
these indicators are short-term.
The Index broke out to a new all-time high. Now, if it can stay above the old high of
2931, it would be a positive for the markets. However, there are still some
worrisome signs
Breadth is falling and is barely above 50% advancing-stocks
over the last 10-days; the sum of indicators is hinting at a turn up, but for
now remains headed down; same for Money Trend – it’s trying to turn up, but seems
stuck in neutral; new-high/new-low data is falling; there have been 15-up days
in the last 20-days and that’s mildly bearish. (The extreme bearish number was
on Tuesday of this week.); Statistical analysis of moves in price-volume on the
NYSE show a market that is too calm. This had been a very good indicator, but
in recent years it has been too early to be useful. It is pointing to trouble
ahead, though.
I am in danger of turning into a perma-bear. That bothers
me, because I am not outright bearish now; it just seems there’s enough
weakness in the underlying market internals to create a better buying
opportunity.
We’ll see next week. It may be time to hold my nose and
buy.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10
Today’s Reading: 0
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.
NOTE: Topping
indicators are good at identifying a blow-off top with buyers in a frenzy. These indicators are not so good at
identifying a slow, rollover-top that can happen when buyers simply go on
strike.
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 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. I sold the rally about half way up expecting a
retest of the lows Dec 2018.
INTERMEDIATE / LONG-TERM INDICATOR
Friday, PRICE was positive; the VIX, VOLUME, and
SENTIMENT indicators were neutral. Overall this is a NEUTRAL indication.
