LEADING ECONOMIC INDICATORS (Conference Board via
prnewswire)
“The Conference Board Leading Economic
Index® (LEI) for the U.S. increased 0.2 percent in April to
112.1 (2016 = 100), following a 0.3 percent increase in March, and a 0.2
percent increase in February.
"The US LEI rose in April, the third consecutive
increase, with a majority of the leading indicators making positive
contributions," said Ataman Ozyildirim, Director of Economic Research at
The Conference Board. "Stock prices, financial conditions, and consumers'
outlook on the economy buoyed the US LEI, although the manufacturing sector
showed continuing weakness. The Conference Board expects economic growth to
moderate toward 2 percent by year end. The current expansion will enter its
11th year in July, becoming the longest expansion in US history." Full
press release at…
MICHIGAN SENTIMENT (Reuters)
“U.S. consumer sentiment jumped to a 15-year high in
early May amid growing confidence over the economy’s outlook, but much of the
surge was recorded before an escalation in the trade war between the United
States and China, which could hurt activity. The University of Michigan said
its consumer sentiment index increased 5.3% to 102.4...” Story at…
MARKET COMMENT (Real Investment Advice, 17 May)
“…it is close to decision time. The pullback is still in line with a rising
trend from December and is still above the 200-day
average. But I need some sort of signal that the upside reversal is at hand
because I also see a downside bowtie crossover perhaps a few days away. If that
happens, then I will have to re-evaluate my stance…I am hopeful but waiting for a sign that the
buyers are back for real. If not, this is not a falling
knife I’m willing to catch.” - Michael Kahn, CMT. Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 dropped about 0.6% to 2860.
-VIX rose about 4% to 15.96.
-The yield on the 10-year Treasury was unchanged a
2.393%.
At the close this past Monday, the long-term indicator
flashed SELL. That was due to the rapid
rise in VIX; my variant of On Balance Volume (OBV) that dropped to sell levels;
and a panic-indicator, that gave two sell-signals in less than a week. We also
saw a sentiment value (%-Bulls, calculated as Bulls/(Bulls+Bears) in selected
Rydex long/short funds) at an extreme 90%-bulls. We have to go back to the
September 2018 top to find sentiment at 90%. (It peaked at 93% about a week and
a half before the top and was 90% for a few days about a month after the top.) Recently
we’ve seen an impressive collection of negativity.
The sell signals we’ve seen recently should be valid and
to further confirm them, Friday, the long-term indicator again flashed sell.
Here are some random thoughts:
One of the interesting indicators that has a good track
record is to track Smart Money via late day action (a variant of the Hayes
Indicator). The Pros seem to start cutting back before the top. It has been
negative for nearly a month.
MACD is bearish.
S&P 500 vs. utilities and S&P 500 vs. cyclicals
are both leaning bearish.
The S&P 500 dropped below its 50-dMA (2864) again, a
bearish sign.
My daily sum of 20 Indicators dropped from +4 to -11 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from -36 to -52. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term. This is a big turn-around to
the bearish side. A one-day swing of 15 is unusual.
Money Trend is still negative and breadth is headed down
as was new-high/new-low data.
The 5-10-20 Timer system remains a sell signal today This
simply means that the 5-dEMA and the 10-dEMA have dropped below the 20-dEMA.
This is a decent indicator all by itself, but it is somewhat prone to whipsaw
action.
To summarize, one would think as bad as the numbers were,
the Index could have been down a percent or so.
I have commented more than once that at this point one
wonders whether we will continue to see falling stock prices or have we been
tricked into panicking over the Tariffs that seem to be much ado about nothing.
Right now, who knows! The whipsaw action seems inexplicable. The Index fell
more than 1/2% in the last hour of trading Friday. We can guess that Traders didn’t want to hold
over the weekend.
Decliners have outpaced advancers over the last 2 weeks
and the curve of breadth is headed down. One Bullish sign, a moving average
convergence divergence (MACD) analysis of Breadth is more bullish so perhaps
the craziness will end and the markets will turn up. I am not betting on it; but
that’s just about the only bullish sign in the stuff I look at.
I still have a very low % invested in stocks and I’m
looking for a buying point. I am not ready yet, but it might be soon.
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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals dropped
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
Friday, the Panic Indicator and the VOLUME indicator were
negative. VIX, PRICE and SENTIMENT indicators were neutral. Overall this is
a NEGATIVE / BEARISH indication.
