“Factory orders in the U.S. fell sharply in April for the
second time in three months, adding to mounting evidence of a broad slowdown in
a key segment of the U.S. economy. Orders dropped 0.8% in the month…” Story at...https://www.marketwatch.com/story/factory-orders-sink-again-highlight-soft-underbelly-of-us-economy-2019-06-04
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 jumped about 2.1% to 2803.
-VIX dropped about 10% to 16.97.
-The yield on the 10-year Treasury rose to 2.134%.
I said Monday that indicators were more bullish and it
looked like we had made a bottom. The market agreed based on today’s big move up.
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%.
We should recognize that this may just be a bounce that will
reverse down later, but for now, I have increased stock holding to 50%. That’s
fully invested for me.
Given the big move up today, a down day would be expected for tomorrow. That might not happen since more follow-thru to the upside is always possible if we've made a solid bottom.
My daily sum of 20 Indicators improved from -6 to +2 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -57 to -43. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
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:
In a correction (where we are now), momentum analysis is
not very useful. Of the ETFs, only the
XLU is likely to make money during the correction. Over the last 2-months, only
ITA (Aerospace and Defense) and XLU (utilities) are up and they are only up 1%.
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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved,
but 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).
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 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. (Bad call –
I really should follow my indicators - but it may yet work out.)
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the VIX indicator was Bearish; VOLUME, PRICE and
SENTIMENT indicators were neutral. Overall the Long-Term Indicator improved
to a NEUTRAL indication. This indicator
is my primary long-term indicator and it gave SELL signals 13 thru 20 May and
now again on 31 May and 3 June so it is bullish to see it improve to Neutral.
