CONSUMER PRICE INDEX (Reuters)
“U.S. consumer prices barely rose in May, pointing to
moderate inflation that together with a slowing economy could increase pressure
on the Federal Reserve to cut interest rates this year…The consumer price index
edged up 0.1% last month…” Story at…
CRUDE INVENTORIES (OilPrice.com)
“Crude oil price fell further today after the Energy
Information Administration reported
another build in inventories at 2.2 million barrels for the week to June 7.”
Story at…
ROOM TO RUN (Safehaven.com)
“…there’s still some room for equities to run with both
the S&P 500 and the Dow Jones expected to rally to new all-time highs for
the rest of the year.” - Alex Kimani for
SafeHaven.com. Commentary at…
HIGH YIELD BONDS BACK TO BULLISH MODE (McClellan
Financial Publications)
“…liquidity is not really in trouble, and now we have an
affirmative sign that the bulls are back in charge…we have just seen a normal
corrective dip, and the uptrend is now back on. Liquidity is not the
problem; tariff worries are. And that is an easier problem for the market
to remedy.” - Tom McClellan, Editor, The McClellan Market Report. Commentary
at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped about 0.2% to 2880.
-VIX dipped about 0.5% to 15.91.
-The yield on the 10-year Treasury increased a whisker to
2.121%.
My daily sum of 20 Indicators slipped slightly from +7 to
+5 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from -8 to +8.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
I’m remain bullish.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10
Today’s Reading: 0
Most Recent Day with a value other than Zero: +1 on 31
May (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.
MOMENTUM ANALYSIS:
I believe the correction/pullback has ended so momentum
analysis should get more valuable. Remember, XLU (utilities) is highly rated,
but that is probably a holdover from the pullback when utilities almost always
outperform.
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
*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…
FYI, I bought a significant position in Microsoft last
Tuesday as I was increasing stock holdings since it was one of the top momentum
plays in my system. Its PE was 27.8. Its PE was twice that a year ago, so it
looks like MSFT has room to run higher as long as it remains highly ranked in
momentum. The PE for the S&P 500 is 26.7 today so MSFT is not overpriced.
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
to POSITIVE 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).
Using the Short-term indicator in 2018 in SPY 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 55% invested in
stocks as of 4 June 2019. This is based on the improved indicators 3 June and
my recommendation to increase stock holdings if we saw strong buying on 4 June.
As a retiree, I am conservatively positioned with a balanced portfolio. You may be comfortable with a higher %
invested in stocks – that’s OK.
INTERMEDIATE / LONG-TERM INDICATOR
Wednesday, VOLUME and PRICE indicators were positive; VIX
and SENTIMENT indicators were neutral. Overall the Long-Term Indicator improved
to BUY. This doesn’t mean much; we bought on a bottom signal on 4 June, the
day after the bottom.
