CRUDE INVENTORIES (OilPrice.com)
“Crude oil prices inched higher after the Energy
Information Administration today reported a draw in
U.S. crude oil inventories of 4 million barrels for the week to May 3. This
compared to a hefty 9.9-million-barrel inventory
build last week, which pressured prices substantially…” story at…
STOCKS ARE IN A BEAR MARKET (CNBC)
“People keep acting like this is some sort of locomotive
that’s chugging along, but the New York Stock Exchange Composite Index — which
to me is the most important one because it’s the biggest — it peaked in January
of 2018 and then couldn’t quite make it back to that peak in October and now it
couldn’t quite get back to that October level and now it’s rolling over again,”
Gundlach [DoubleLine chief Jeffrey Gundlach] said. He believes U.S. stocks are
still in a bear market because the NYSE composite index has fallen “over 20%
and has failed to return to its high.” Until the index “takes out that high,”
it remains in a bear market, Gundlach said.” Story at…
My cmt: Technically, he is right. Let’s hope the markets
can get thru this rough patch and take out those old highs.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dropped about 0.2% to 2879.
-VIX rose about 0.4% to 19.4.
-The yield on the 10-year Treasury rose to 2.483%.
The Bulls were counting on a positive close today, but
they were disappointed with a 16pt. decline in the S&P 500 during the last
half hour of trading. With all of the Trump
Tariff turmoil, we can suppose that traders didn’t want to hold over night.
I mentioned sentiment might give a sell signal soon. Last
night the %-bulls (sentiment) rose, but stopped short of a sell signal. If it does
turn negative, it would probably send the Long-term indicator to a bearish
indication. That could happen anyway
depending on other indicators.
If the Long-term indicator slips to a negative (bearish) indication,
I would reduce stock investments to a conservative level. (I’m already there –
at a 30% stock allocation.)
-The 50-dMA is now 2858 and that’s a major support point.
-The drop today put the Index very close to its lower
Bollinger band and that’s slightly bullish. I’d like for RSI confirm to this
signal, but RSI is not close to a buy at this point.
My daily sum of 20 Indicators remained -9 (a positive
number is bullish; negatives are bearish) while the 10-day smoothed version
that negates the daily fluctuations dropped from +21 to +5. Most of these
indicators are short-term. This is a bearish indication. While the 10-day
version is still positive, it is falling sharply.
I still have a very low % invested on stocks and I’m
looking for a buying point. I don’t think the market has made a bottom yet, but
it’s possible that it won’t take too much longer. I am going to wait for
indicators to get bullish before I move.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10
Today’s Reading: 0
Most Recent Day with a value other than Zero: -1 on 30
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)
*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
NEGATIVE 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).
I ran the numbers for 2018. Using the Short-term
indicator 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, VIX and the Panic Indicator were negative;
PRICE, VOLUME, and SENTIMENT indicators were neutral. Overall this is a NEUTRAL
indication.
