RETAIL SALES (Bloomberg)
“U.S. retail sales unexpectedly declined in April for the
second time in three months, weighed down by soft sales of autos and building
materials and suggesting consumer spending will remain subdued this quarter. The
value of overall sales declined 0.2%...” Story at…
EMPIRE MANUFACTURING (MarketWatch)
“The Empire State manufacturing survey in May climbed to
a six-month high of 17.8 from a reading of 10.1 in April, the New York Fed
announced Wednesday.” Story at…
INDUSTRIAL PRODUCTION (Reuters)
“The moderation in economic activity was underscored by
other data on Wednesday showing a drop in industrial production last month. The
economy is slowing as the stimulus from the White House’s $1.5 trillion tax cut
package fades… the Federal Reserve said industrial production fell 0.5% in
April…” Story at…
CRUDE INVENTORIES (OilPrice.com)
“The Energy Information Administration reported a crude oil
inventory build of 5.4 million barrels for the week to May 10. This follows
a 4-million-barrel draw
a week earlier.” Story at…
MEDIA LIES ABOUT TARIFFS (MarketWatch)
“Tariffs are simply federal taxes. That’s it. The extra
costs paid by importers, and consumers, goes to Uncle Sam, to distribute as he
sees fit…And the amounts involved are trivial. Chicken feed. President Trump
just hiked tariffs from 10% to 25% on about $200 billion
in Chinese imports. In other words, he just raised taxes by … $30
billion a year. The total amount we all paid in taxes last year — federal,
state and local — was $5.51 trillion. This tax increase that has
everyone’s panties in a twist is a rounding error…Don’t buy the hysteria.
President Trump is simply trying to pressure our biggest competitor to buy more
American goods. That should be a good thing, even if you don’t like him.” –
Brett Arends. Commentary at…
My cmt: So this amounts to a tax hike of one-half of one
percent; it is trivial. The world
isn’t going to end. Is Wall Street playing us for suckers?
TARIFF IMPACTS (Financial Sense)
My cmt: The most striking impression I have looking at
the above chart is that the rest of the world economies must be slowing
precipitously to be affecting earnings as much as they are. I doubt that it’s
all a result of Tariffs.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.6% to 2851.
-VIX dropped about 9% to 16.44.
-The yield on the 10-year Treasury dipped to 2.376%.
The S&P 500 is climbing toward its 50-dMA (2864) and
that point is now resistance. Well need to watch indicators and see if we can discern
where this market s headed.
My daily sum of 20 Indicators improved from -8 to -5 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from -37 to -45. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term. This remains a bearish
indication.
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.
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, according to the post above (“Media Lies about Tariffs”), are much ado about
nothing!
Indicators are still negative, but they are improving.
I still have a very low % invested in 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: +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)
*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 improved
to NEUTRAL 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
Wednesday, the Panic Indicator and VOLUME indicators were
negative. VIX, PRICE and SENTIMENT indicators were neutral. (Sentiment was very
nearly a sell as of Friday.) Overall this remains a BEARISH indication that
is issuing a SELL signal, but it improved a lot today.
