PAYROLL REPORT (USA Today)
“Hiring was strong for the second straight month in
April and unemployment fell to a new 50-year low, easing concerns that a
slowing global and U.S. economy could dampen job growth. Employers added a
booming 263,000 jobs, the Labor Department said Friday. The unemployment rate
fell from 3.8% to 3.6%, lowest since December 1969…” Story at…
ISM NON-MANUFACTURING (Institute for Supply Management
via prnewswire)
“Economic activity in the non-manufacturing
sector grew in April for the 111th consecutive month, say the nation's
purchasing and supply executives in the latest Non-Manufacturing
ISM® Report On Business®…"The NMI® registered 55.5 percent, which is
0.6 percentage point lower than the March reading of 56.1 percent. This
represents continued growth in the non-manufacturing sector, at a slightly
slower rate.” Press release at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1% to 2946.
-VIX dropped about 11% to 12.87.
-The yield on the 10-year Treasury dropped to 2.522%.
Looks like the market liked today’s payroll report.
Today was a statistically significant up-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically significant up-day is followed by a down day about
60% of the time. This is the fourth statistically significant move in the last
15-trading sessions. That’s not enough to give us an idea of where the market
wants to go. Back-and-forth moves can
indicate a top, but we haven’t got enough to make a call yet, other than to say
that Monday is more slightly more likely to be down than up.
The market remains too calm and another big drop is
necessary to clear the indicator. Just to put this in perspective, statistical
analysis is predicting a drop of 2% to 4% at some point within the month. That
remains today, but it doesn’t necessarily mean that we are expecting a huge
drop in an ensuing correction. In fact,
given that there are no topping indicators today, a small correction in the
3-5% range seems more likely – if a correction does develop from here.
Bollinger Bands did not issue a sell signal on the big
move up today; the Index is about 1/2% below the upper band.
My daily sum of 20 Indicators improved from -4 to +4 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations declined from +11 to +19. Most of
these indicators are short-term. Nice bullish move today – we’ll see if there’s
a follow-thru Monday.
The Smart Money (late-day-action) is selling, by the
way.
I still have a very low % invested on stocks and I’m
still looking for a buying point – perhaps this is the start of a buying
opportunity? We’ll see.
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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
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
Friday, PRICE improved to Positive; VIX, VOLUME, and
SENTIMENT indicators were neutral. Overall this is a NEUTRAL indication.
