JOBLESS CLAIMS
The number of Americans filing applications for
unemployment benefits fell more than expected last week, pointing to underlying
market strength despite a sharp slowdown in job growth in May. Initial claims
for state unemployment benefits dropped 6,000 to a seasonally adjusted 216,000
for the week ended June 15…” Story at…
PHILADELPHIA FED INDEX (MarketWatch)
“The Philadelphia Fed manufacturing index in June fell to
just 0.3 after registering a four-month high of 16.6 in the prior month. Any
reading above zero indicates improving conditions.
LEADING ECONOMIC INDICATORS (Conference Board via prnewswire)
“The Conference Board Leading Economic Index®(LEI) for
the U.S. was unchanged in May, remaining at 111.8 (2016 = 100), following
a 0.1 percent increase in April, and a 0.2 percent increase in March. "The
US LEI was unchanged in May, following three consecutive increases," said
Ataman Ozyildirim, Director of Economic Research at The Conference Board.
"…While the economic expansion is now entering its eleventh year, the
longest in US history, the LEI clearly points to a moderation in growth towards
2 percent by year end." Press Release at…
MORE GAINS AHEAD (CNBC)
“The S&P 500 just set
an intraday record Thursday [and closed at an all-time high]. For doubters
thinking the rally is just a last gasp of the decade long bull market, analysts
who study charts to make buying and selling decisions believe there is more
room to run.” Story at …
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 1% to 2954.
-VIX rose about 3% to 14.75.
-The yield on the 10-year Treasury slipped to 2.014%.
Today the S&P 500 made a new all-time high. RSI flipped
to bearish today, but Bollinger Bands are still in neutral territory. Bollinger
Bands are close to overbought, but not there yet. I use these indicators together so I am cautious,
but still bullish. These signals could be bearish for some time. It would take more than RSI and Bollinger
Bands to call a sell.
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.
The Smart Money (late day action) up today, but has been
down over a longer term. We’ll have to see where this stat goes. Even with a
few negative indicators, most are bullish.
My daily sum of 20 Indicators improved from +2 to +5 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from +53 to +54. (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: -1
Most Recent Day with a value other than Zero: -1 on 20
June (RSI was bearish.)
(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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
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
Thursday, 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.
