PPI (Reuters)
“‘There is no evidence of falling inflation in this
report,’ said John Ryding, chief economist at RDQ Economics in New York.
Producer prices excluding food, energy and trade services rose 0.4% last month,
matching April’s gain, the government said. The so-called core PPI increased
2.3% in the 12 months through May…” Story at…
Overall, the report was in line with expectations and not
bad news. Some were worried about the
lack of inflation…go figure.
SMALL BUSINESS SURVEY (Advisor Perspectives)
“Optimism among small business owners has surged back to
historically high levels, thanks to strong hiring, investment, and sales,” said
NFIB President and CEO Juanita D. Duggan.” Commentary and analysis at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 1pt to 2886.
-VIX rose about 0.3% to 15.99.
-The yield on the 10-year Treasury slipped a whisker to
2.141%.
I would have been shocked if the S&P 500 had been up
today. 5-days up in a row is a lot, but
6 in a row? I don’t have the stats, but I bet it’s a rare occurrence. Still,
the Index was just barely down and I’ve always superstitiously assumed that to
be bullish. It didn’t want to go down
after all.
Sentiment continues to drop suggesting that higher-highs
are possible…and expected. I measure Sentiment as %-Bulls (Bulls/{bulls+bears})
based on the amounts invested in Rydex/Guggenheim mutual funds. %-Bulls peaked
at 90%-bulls (on a 5-day basis) on 10 May, 8 days after the top of what turned
out to be a 7% pullback. Monday, Sentiment has declined all the way down to
82%-bulls. That may not sound like much,
but it has taken a month to fall that far, suggesting we could see at least a
month of gains, and probably a lot more, before we have to worry about market
Sentiment getting over-heated.
Once again, the talking heads are telling us that volume
is low on this rebound; conviction is low, and therefore the bounce is
suspect. Paaaleeeassse! I am so tired of
hearing this from so called experts.
(Actually, my numbers show that volume hasn't been particularly low.) Volume is ALWAYS LOW after a correction, because not all
investors/traders are convinced that the bottom is in. Low volume during a
bounce after a correction is meaningless.
Look at the Advance-decline line; that means something. Right now, it is Bullish!
My daily sum of 20 Indicators slipped slightly from +8 to
+7 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from -16 to -8.
(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: 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.
TUESDAY 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
Tuesday, the VIX indicator was negative (the Options Boys
were in a bad mood); VOLUME and PRICE indicators were positive; and SENTIMENT was
neutral. Overall the Long-Term Indicator remained NEUTRAL. If it weren’t
for VIX, we would have seen another BUY signal. We may see a buy signal on the
long-term indicator soon.
