FOMC RATE DECISION (MarketWatch)
From the FED statement:
“Information received since the Federal Open Market
Committee met in May indicates that the labor market remains strong and that
economic activity is rising at a moderate rate…
…Consistent with its statutory mandate, the Committee
seeks to foster maximum employment and price stability. In support of these
goals, the Committee decided to maintain the target range for the federal funds
rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained
expansion of economic activity, strong labor market conditions, and inflation
near the Committee’s symmetric 2 percent objective as the most likely outcomes,
but uncertainties about this outlook have increased. In light of these
uncertainties and muted inflation pressures, the Committee will closely monitor
the implications of incoming information for the economic outlook and will act
as appropriate to sustain the expansion, with a strong labor market and
inflation near its symmetric 2 percent objective…
…Voting for the monetary policy action were Jerome H.
Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard;
Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and
Eric S. Rosengren. Voting against the action was James Bullard, who preferred
at this meeting to lower the target range for the federal funds rate by 25
basis points.” Full statement at…
CRUDE INVENTORIES (OilPrice.com)
“After two consecutive weeks
of crude oil inventory builds, this week the Energy Information
Administration offered some respite for prices with a draw, of 3.1
million barrels for the week to June 14.” Story at…
RECESSION ODDS HIGHER THAN YOU THINK (Real Investment
Advice)
“According to the New York Fed’s
recession probability model, there is a 30% probability of a U.S.
recession in the next 12 months. The last
time that recession odds were the same as they are now was in July 2007, which
was just five months before the Great Recession officially started in December
2007.” Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.3% to 2926.
-VIX dipped about 5% to 14.33.
-The yield on the 10-year Treasury slipped to 2.024%.
Not much change from prior blogs…
My daily sum of 20 Indicators slipped from +5 to +2 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations remained +53. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term.
Cyclical stocks are still under-performing the S&P
500 while Utilities are out- performing relative to the S&P 500. Both are
bearish indications. We need to pay
close attention.
The Smart Money (late day action) has been selling
recently and was down a little today. We’ll have to see where this stat goes in
the next few days.
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 may be 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…
WEDNESDAY 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).
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
remained to BUY. At this point, this just indicates that conditions are
pretty good, but it isn’t valuable as a timing device; I issued a BUY
recommendation on 4 June, the day after the bottom.
