DURABLE GOODS ORDERS (Reuters)
“New orders for U.S.-made capital goods fell more than
expected in April, further evidence that the economy was slowing after a growth
spurt in the first quarter that was driven by exports and a buildup of
inventories…Orders for non-defense capital goods excluding aircraft, a closely
watched proxy for business spending plans, dropped 0.9% last month…” Story at…
GDP 1% SAYS JP MORGAN (Reuters)
“J.P. Morgan on Friday more halved its previous estimate
on U.S. economic growth in second quarter to 1.00% following data that showed a
fall in durable goods orders in April.” Story at…
THE BIG HACK (Bloomberg)
“…the ensuing top-secret probe, which remains open more
than three years later, investigators determined that the chips allowed the
attackers to create a stealth doorway into any network that included the
altered machines. Multiple people familiar with the matter say investigators
found that the chips had been inserted at factories run by manufacturing
subcontractors in China.” Story at…
My cmt: The Netherlands has raised similar alarms over
Chinese spying utilizing tech equipment supplied by China.
OFF TOPIC OPINION - IMPEACHMENT
I am troubled by the Democrats and their partisan,
incompetent, cries for impeachment. How
can the President be impeached for obstruction for a crime he didn’t commit? He
can always answer that he was trying to save taxpayers 35-million dollars by putting
an end to, in his opinion, a phony witch-hunt, attempted coup. The real issue
is that few of our Politicians are willing to do what they swore to do when
they were elected – uphold the Constitution. That includes Trump and the
Congress. Here’s a piece from today:
“Trump, frustrated with Congress holding up weapons sales
like a major deal to sell Raytheon Co precision-guided munitions to Saudi
Arabia, was considering using a loophole in arms control law to go ahead with
the sale by declaring a national emergency.”
So, selling arms to the Saudis is a national emergency?
Building a wall on the southern border is a national emergency?
As I have opined before…
The Trump emergency declaration for a wall is
un-constitutional. Funding is the purview of the Congress. Can a President say taking care of old people
is an emergency and take funding from other appropriations and use it for
Social Security and Medicare? Can a President take funds from other
appropriations and use them for improving the military? Could a President fund
the war on drugs because it’s an emergency and Congress didn’t appropriate
enough money? No. Funds for these
activities are appropriated by Congress as is wall-construction. It’s true by
the law; it’s true by past practice and its true per the Constitution. It takes
two acts of Congress to spend money: (1) an authorization bill (2) an
appropriations bill, both signed into law by the President. The sad thing is,
all Politicians swore an oath to uphold the Constitution.
If the Democrats want to impeach, they should impeach on
Trump’s unconstitutional usurpation of powers granted to the Congress under the
Constitution. They won’t though. The current impeach-Trump movement is nothing
more than Political grandstanding designed to weaken Trump and win elections.
Politicians are all weasels, but I hate to slander
weasels!
-Friday the S&P 500 rose about 0.1% to 2826.
-VIX fell about 6% to 15.85.
-The yield on the 10-year Treasury was unchanged at 2.326%.
One of the indicators I look at I the Fosback High/Low Logic
Indicator. “The High Low Logic Index was developed by Norman Fosback. It is
calculated as the lesser of the number of new highs or new lows divided by the
total number of issues traded. Daily or weekly NYSE data is typically used in
the calculation. The concept behind the indicator is that either a large number
of stocks will establish new highs or a large number of stocks will establish
new lows, but normally not both at the same time. Since the High Low Logic
Index is the lesser of the two ration, high readings are infrequent. When a
high indicator reading does occur, it signifies that market internals are
inconsistent with many stocks establishing new highs at the same time that many
stocks establish new lows. When this happens, it is considered bearish for
stock prices.” From…
We’re not there yet, but the Fosback indicator is
definitely headed in the bear direction, because both 52-week highs and lows
have been elevated recently.
On the day, we saw some late-day selling, and the Smart
Money indicator is again flat, a neutral sign.
My daily sum of 20 Indicators dropped from -3 to -4 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations remained -45. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term.
MACD continued more sharply down. Breadth (% of stocks
advancing over the last 10-days) remained 49% so the advance decline line is
negative over the last 10-days. New-high/new-low data is headed down a bearish
sign.
My Money Trend indicator turned up and is now mildly bullish.
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, but this signal has expired.)
(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 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
Friday, the Volume, VIX, PRICE and SENTIMENT indicators
were neutral. Overall this is a NEUTRAL indication. Just a reminder: This indicator is my primary long-term indicator and
it gave SELL signals 13 thru 20 May.
