HOUSING STARTS (Bloomberg)
“U.S. new-home construction fell in May after an April
reading that was stronger than initially reported, signaling stabilization in
the market amid lower borrowing costs. Residential starts dropped 0.9%...Permits,
a proxy for future construction, increased 0.3%...” Story at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1% to 2918.
-VIX dipped about 1.3% to 15.15.
-The yield on the 10-year Treasury slipped to 2.057%.
My daily sum of 20 Indicators improved slightly from +4
to +5 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from +50 to +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. Investors are on hold
awaiting the Fed meeting results due Wednesday. A big move is possible ether
way on the news.
The Smart Money (late day action) has been selling
recently. Presumably they are concerned about the upcoming FED announcement.
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…
TUESDAY 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
Tuesday, 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.
