FOMC RATE DECISION (YahooNews)
“The Federal
Reserve announced May 1 that it is holding the benchmark
interest rate steady at a target range of 2.25% to 2.5%, noting that inflation
is “running below” its stated target of 2%...The central bank’s statement
walked back its March view that the economy had “slowed” from the end of last
2018, noting that recent developments show that economic activity “rose at a
solid rate…The Fed, however, said household spending and business fixed
investment “slowed” in the first quarter.” Story at…
ADP EMPLOYMENT (Reuters)
“U.S. private employers added 275,000 jobs in April, well
above economists’ expectations and the most since last July, supporting the
view of a solid domestic labor market, a report by a payrolls processor showed
on Wednesday.” Story at..
CONSTRUCTION SPENDING (Housing wire)
“The U.S. Census Bureau announced
that construction spending during March 2019 was estimated at a seasonally
adjusted annual rate of $1.28 trillion, retreating 0.9% from the
revised February…March’s spending is 0.8% below the March 2018
estimate...” Story at…
ISM MANUFACTURING (Investors Business Daily)
“The ISM manufacturing index fell in April to the weakest
level since late 2016, signaling that manufacturing headwinds extended into the
second quarter as companies continue to confront uncertainty about trade. The Institute
for Supply Management index slumped to 52.8…” Story at.
CRUDE INVENTORIES (OilPrice.com)
“Crude oil traded lower today after the Energy
Information Administration reported a
substantial build in crude oil inventories, at 9.9 million barrels for the last
week of April.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell about 0.8% to 2924.
-VIX jumped up about 13% to 14.8.
-The yield on the 10-year Treasury rose slightly to 2.507%.
The high for the day was 2954 and that’s one point above
the upper Bollinger Band. Perhaps that’s what spooked traders and led to a
late-day sell-off? I didn’t watch Powell’s Fed statement/press conference; there
could have been something there that othered traders, I don’t know.
Over the last 10-days, up-volume has only been 49% of the
total. This stat has been trending down since 7 January. The Breadth (%-stocks
advancing) is sitting at 51%. That’s OK and it would need to fall well below
50% before we see a serious correction. (We could see a small 3-5% correction at
any time.)
There was a bearish cross of MACD signal line, but I don’t
think it means much. This indicator could flop back and forth since the lines
are very flat.
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.
Still, even with the big jump down today, statistical analysis
shows the market remains too calm and another big drop is necessary to clear
the indicator.
My daily sum of 20 Indicators improved from +7 to +3 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from +6 (yesterday +64 was
a typo) to +13. Most of these indicators are short-term.
I still have a very low % invested on stocks – perhaps this
is the start of a buying opportunity? My guess is probably not, but let’s watch
and see what happens
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 slipped
to 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).
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, PRICE, VIX, VOLUME, and SENTIMENT indicators
were neutral. Overall this is a NEUTRAL indication.
