FOMC MINUTES (Bloomberg)
“Federal Reserve officials judged at their latest meeting
that their patient approach to interest-rate change would be appropriate “for
some time,” and many sided with Chairman Jerome Powell’s view that the recent
dip in inflation was probably temporary.” Story at…
JOBLESS CLAIMS (CNBC)
“The number of Americans filing applications for
unemployment benefits unexpectedly fell last week, pointing to sustained labor
market strength even as the economy slows. Initial claims for state unemployment
benefits slipped 1,000 to a seasonally adjusted 211,000 for the week ended May
18…” Story at…
MANUFACTURING (MarketWatch)
“Faced with less demand from customers and a flareup in
U.S.-China trade tensions, American businesses grew in May at the slowest pace
since before President Trump was elected, a pair of new surveys show. An IHS
Markit “flash” survey of U.S. manufacturers fell to a nine-and-a-half year low of 50.6 this month
from 52.6 in April. Manufacturing conditions have been soft for months.
NEW HOME SALES / MANUFACTURING (Reuters)
“Sales of new U.S. single-family homes fell from near an 11-1/2-year
high in April as prices rebounded and manufacturing activity slowed to its
lowest level in nearly a decade in May, pointing to a slowdown in economic
activity.” Story at…
CHINA – TRADE TALKS CAN’T CONTINUE UNLESS… (CNBC)
“If the U.S. would like to keep on negotiating it should,
with sincerity, adjust its wrong actions. Only then can talks continue,”
Ministry of Commerce spokesperson Gao Feng said Thursday in Mandarin, according
to a CNBC translation. He did not mention any U.S. actions specifically, but
it’s been a tense couple of weeks between the world’s two-largest economies.”
Story at…
CFC’s POLLUTING THE ATMOSPHERE (ScienceAlert)
“It's been exactly one year since US scientists reported a
mysterious surge in ozone-destroying chemicals, known as
chlorofluorocarbons (CFCs). Banned in 1987 under the globally signed Montreal Protocol, there
was only one explanation: somewhere out there, in an unknown location, someone
must have gone rogue, setting back progress on the ozone hole by a decade or
more. After much speculation, the whereabouts and magnitude of these harmful
emissions has been confirmed in scientific research. As earlier reporting
in The New
York Times had already
suggested, they seem to be coming from the northeast coast of
mainland China.” Story at…
My cmt: Here’s a really crazy, somewhat related stat: The
U.S. has reduced its carbon dioxide (CO2) emissions by 11% since 2008. In fact,
over the last 30 years, U.S. CO2 emissions have only gone up by 6% while the rest
of the world’s emissions have increased by 83%. Currently the U.S. CO2 emissions
are only 15% of the world’s total. The Global Warmers (those panicked by global
warming) don’t seem to understand that even if the U.S. were to cut to zero, it
would have little effect on the total atmospheric CO2. (China currently
releases about 30% of the total CO2.) BTW: When possible, I avoid “Made in
China.”
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dropped about 1.2% to 2822.
-VIX rose about 15% to 16.92.
-The yield on the 10-year Treasury slipped to 2.322%.
There were a few bullish signs today, but not many. On a 20-day
basis, the Smart Money is turning up, based on late-day buying. The Pros trade
late-day and tracking late-day action gives us a general idea of what the Pros
are up to. They usually start buying before the bottom and sell before the top.
On the day, we saw some big late-day buying, but that is
not unusual on a big down day, especially since it is well known that big moves
down are often followed by up-days. Hard to say whether the late-day buyers are anticipating tomorrow’s up-day or
if they think today was a bottom. It doesn’t matter to me; no bottom indicators
flashed today and that includes Bollinger Bands and RSI. It could be a bottom,
but without any indicators to support a bottom call, I will wait for a confirmation.
Today was a statistically significant down-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically significant down-day is followed by an up-day about
60% of the time. There was late-day buying that reinforces a possible up-day
tomorrow. Otherwise, indicators were down.
My daily sum of 20 Indicators dropped 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 -51 to -45. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term.
My Money Trend indicator turned down and is now mildly
bearish. MACD had looked like it might switch to bullish, but today it turned lower
and confirmed the down move. Breadth (% of stocks advancing over the last
10-days) is now 49% so the advance decline line is negative over the last
10-days.
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…
THURSDAY 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
Thursday, 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.
