JOLTS (Bloomberg)
“U.S. job openings rebounded more than expected in the
biggest gain in a year, indicating demand for workers remains healthy in a
tight labor market. The number of positions waiting to be filled rose by
346,000 in March to 7.49 million…” Story at…
THE BUFFET INDICATOR (The Felder Report – 7 Mar 2019)
“According to his [Warren Buffet’s] own measure, stocks
are just as highly-valued today as they were near the peak of the dotcom mania.
The chart below plots the total value of U.S. equities to the total size of the
U.S. economy. In December of 2001, Mr. Buffett wrote of it, ‘it is probably the
best single measure of where valuations stand at any given moment…’
…Equity investors better hope this sentiment extreme can
sustain itself indefinitely. Because a reversion in sentiment likely means a
reversion in valuations, a reversion at least on par with that seen after the
last time both valuations and euphoria reached their present extremes.” – Jesse
Felder
Chart and discussion at…
My CMT: The valuations are worse now than when this chart
was developed in March.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dropped about 1.7% to 2884.
-VIX jumped about 25% to 19.32.
-The yield on the 10-year Treasury fell to 2.455%.
It doesn’t take analytics to indicate that today was a bad
day. I had been saying for a while that statistics were calling for a 2-4% drop
on the S&P 500 in order to clear my statistical-analysis, warning signal.
Today, that indicator cleared (intra-day the Index easily exceeded the 2%
prediction), but now we are left with an indicator that has morphed into a “panic-warning”
that usually (not always) brings us more down days ahead.
The panic indicator can be a bottom sign (because it
signals extremes). When we look at bottom indicators, we see that none are
calling a bottom. Further, none of my indicators were bullish.
My Sentiment indicator is based on %-Bulls
(Bulls/{bulls+bears}) based on the amounts invested in Rydex/Guggenheim long/short
mutual funds. Last night, the bulls
stepped in and were buying the dip. This
has pushed sentiment to near a sell, but it is not there yet. It will be interesting to see if the buyers
move in again to “buy-the-dip” after today’s rout. This information is not
published until late (after 10:30pm) so we’ll have a wait. Sentiment has been a reliable indicator,
although it was about a month early for the January 2018 and the 20 September
2018 corrections. It is based on a statistical analysis that compares today’s
extreme Bullishness with those seen during the dot.com bubble.
The 50-dMA is now 2855 and that’s a major support point.
My daily sum of 20 Indicators dropped from +8 to -9 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from +31 to +21. Most of
these indicators are short-term.
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 some late-day buying that reinforces a possible
up-day tomorrow.
I still have a very low %-invested in stocks and I’m
still looking for a buying point. This looks like the start of a buying
opportunity. I don’t think it 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 make a 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…
TUESDAY MARKET INTERNALS SHORT-TERM INDICATOR (NYSE DATA)
Market Internals collapsed
from positive to 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
Tuesday, VIX was negative; PRICE, VOLUME, and SENTIMENT
indicators were neutral. Overall this is a NEUTRAL indication. If this
indicator slips to a negative (bearish) indication, I would reduce stock investments
to a conservative level. (I’m already there – a 30% stock allocation.)
