JOBLESS CLAIMS (MarketWatch)
“Initial jobless claims fell by 2,000 from a seasonally
adjusted 230,000 in the prior week, the government said Thursday.” Story at…
PRODUCER PRICE INDEX (Bloomberg)
“A measure of underlying U.S. inflation-pipeline
pressures rose by less than forecast in April, suggesting Federal Reserve
officials may need to await more data to validate their view that muted price
gains will prove transitory. Excluding food and energy, producer prices
increased 2.4% from a year earlier, matching the slowest gain since last May…”
Story at…
UPTREND HAS BEEN SHATTERED (Northman Trader)
“Be aware…however these trade talks turn out market
participants are on notice: The 2019 trend is officially shattered and the
charts told you ahead of time that it was coming. Bulls have a lot of technical
damage to repair and require new highs or are at risk of being confronted with
major potential topping patterns.” Commentary and charts at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dropped about 0.3% to 2871.
-VIX dipped about 1.6% to 19.1.
-The yield on the 10-year Treasury slipped to 2.455%.
Pundits were bullish that the S&P 500 did not close below
the 50-dMA (2860). I have suggested that it was an important level, too;
but I am far from sure…the 50-dMA is only 2.8% below the all-time high for the
S&P 500. That’s not much of a drop
and I doubt that it is enough of a drop to clear the over-bullishness that has
driven the rally. If I had to guess at a near-term bottom for this dip, the
200-dMA seems more likely than the 50-dMA. Of course, since the trade deal is
driving a lot of this action, the market may depend on the next Presidential
tweet! 2860 (the current 50-dMA) is below the current lower Bollinger Band
(2869). If the RSI were to give a buy signal along with the Bollinger Band and
the Index remained at or above the 50-dMA we could see some buying. There are
not many bullish signs though.
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 +5 to -6. Most of these
indicators are short-term. This is a bearish indication.
So far, it does not appear that we have made a bottom.
I still have a very low % invested on stocks and I’m
looking for a buying point. 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…
THURSDAY 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
Thursday, VIX and the Panic Indicator were negative;
PRICE, VOLUME, and SENTIMENT indicators were neutral. Overall this is a NEUTRAL
indication.
