RETAIL SALES (Reuters)
“U.S. retail sales increased in May and sales for the
prior month were revised higher, suggesting a pick-up in consumer spending that
eased fears the economy was slowing down sharply in the second quarter.” Story
at…
INDUSTRIAL PRODUCTION (MarketWatch)
“Industrial production rose 0.4% in May, a solid and broad-based
gain helped by increased production of pickup trucks and cars, the Federal Reserve said Friday. It was the strongest monthly
rise in six months.” Story at…
MICHIGAN SENTIMENT (Bloomberg)
“U.S. consumer sentiment weakened in June and long-term
inflation expectations dropped to the lowest on record as the outlook for the
economy dimmed amid President Donald Trump's stepped-up trade war. The
University of Michigan's preliminary sentiment index fell to 97.9 from 100 in
May…” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 dipped about 0.2% to 2887.
-VIX dipped about 4% to 15.15.
-The yield on the 10-year Treasury slipped to 2.084%.
My daily sum of 20 Indicators dipped slightly from +6 to
+5(a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from +24 to +40.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
We still look good. I have been surprised to see Cyclical
stocks under-performing while Utilities are over-performing relative to the
S&P 500. Both are bearish indications, but other indicators are not
agreeing, so no need to worry at this point.
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 at the
BUY signal on 4 June as 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.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals slipped
to 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
Friday, VOLUME and PRICE indicators were positive; VIX
and SENTIMENT indicators were neutral. Overall the Long-Term Indicator remained
to BUY. This doesn’t mean much; I issued a BUY recommendation on 4 June,
the day after the bottom. We’re watching now to see if the correction is really
over; we could still see a retest of the prior low. So far, it appears to be
over.
