JOLTS (Bloomberg)
“U.S. job openings remained near a record in April,
signaling demand for workers was firm ahead of weaker hiring in the following
month that’s raised concerns the economy is slowing.” Story at…
IS THERE MORE TO GO IN THE RALLY? (Real Investment
Advice)
“The question to answer this week, is whether there is
more left to this rally before the next decline? I think the answer to that
question is “yes.”
I recently interviewed Charles Nenner who is a practitioner/forecaster of
long-term stock market cycles. As he correctly predicted in our discussion,
this current rally would start at the end of May and last into July before the
next more serious decline begins.” – Lance Roberts. Commentary at…
STOCKS BOTTOM ON SCHEDULE (Heritage Capital)
“It’s amazing how quickly stocks turned on a dime [last
Monday] and the news narrative has changed from all of the negative
consequences concerning tariffs and the coming recession to the Fed about to
begin a rate cutting cycle which would rescue the economy and markets. My tune
has never wavered. The bull market remains alive and al-time highs should be
seen in Q3.” - PAUL SCHATZ, PRESIDENT, HERITAGE CAPITAL Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.5% to 2887.
-VIX dipped about 2% to 15.94.
-The yield on the 10-year Treasury rose to 2.146%.
The FOSBACK Logic Index that I mentioned yesterday is
still leaning bearish, but the new-lows fell again from 46 Friday to 27 today.
The indicator is starting to slowly get more bullish.
My daily sum of 20 Indicators improved from +7 to +8 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -28 to -16. (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 bullish now, given that indicators are bullish and
turning more bullish; price action still looks strong; the Smart Money is
buying; and other signs are confirming my belief that the pullback ended a week
ago, on last Monday.
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.
MONDAY 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
Monday, the VIX, VOLUME, PRICE and SENTIMENT indicators
were neutral. Overall the Long-Term Indicator remained NEUTRAL.
