CRUDE INVENTORIES (oilprice.com)
“The American Petroleum Institute (API) reported another
surprise build in crude oil inventory of 2.4 million barrels for the week
ending May 17, coming in over analyst expectations of a 2.53-million-barreldrawdown
in inventories.
A DECADE OF LOW RETURNS (Real Investment Advice)
“…I am
not suggesting the next “financial crisis” is just around the next corner. I
am simply suggesting that based on a variety of measures, forward returns will
be relatively low as compared to what has been witnessed over the last
decade…“this time is not different,” and in the end, many
investors will once again be reminded of this simple fact. Unfortunately, those
reminders tend to come in the most brutal of manners.” Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dropped about 0.3% to 2856.
-VIX dropped about 1% to 14.75.
-The yield on the 10-year Treasury slipped to 2.386%.
My daily sum of 20 Indicators improved from +1 to +2 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -62 to -51. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
On the day, indicators were little changed. See yesterday’s
blog for a run-down of most of the indicators.
The markets look a little confused now as Mr. Market tries
to decide whether it’s going to be up or down. The trend has gone flat, so any
comment now on which direction the market is headed would be a guess. (I am guessing down, but it’s just a guess; we’ll
see.) I still have a very low % invested in stocks and I’m looking for a buying
point.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10
Today’s Reading: 0
Most Recent Day with a value other than Zero: +2 on 13
May (RSI & Bollinger Bands were bullish.)
(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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals dropped
to NEUTRAL on the market at the close.
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).
Using the Short-term indicator in 2018 in SPY would have
made a 5% gain instead of a 6% loss for buy-and-hold. The methodology was Buy
on a POSITIVE indication and Sell on a NEGATIVE indication and stay out until
the next POSITIVE indication. The back-test included 13-buys and 13-sells, or a
trade every 2-weeks on average.
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
Wednesday, the Volume, VIX, PRICE and SENTIMENT
indicators were neutral. Overall this is a NEUTRAL indication.
