CPI (MarketWatch)
“Americans paid more for rent, clothes and autos in June, but
consumer inflation was largely held in check by falling energy prices…The
so-called core rate that strips out food and energy jumped 0.3% last month,
marking the biggest increase in a year and a half…The 12-month increase in the
core rate edged up to 2.1% from 2%.” Story at…
JOBLESS CLAIMS
The number of Americans filing applications for unemployment
benefits dropped to a three-month low last week, suggesting sustained labor
market strength that could help support a slowing economy. Initial claims for
state unemployment benefits declined 13,000 to a seasonally adjusted 209,000
for the week ended July 6…” Story at…
DON’T THROW CAUTION TO THE WIND (Financial Sense)
“…in the context of an economy that has grown old after not
just one or two, but three rounds of quantitative easing and a decade of sub
three percent interest rates, the potency of an accommodative U.S. Fed leads us
to believe that weaker economic growth may outweigh the positives of easier
policy.” Commentary at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.2% to 3000.
-VIX fell about 1% to 12.93.
-The yield on the 10-year Treasury rose to 2.139%.
The XLI-ETF (Cyclical Industrial stocks) is
underperforming S&P 500. This is not a good sign. If investors were optimistic,
we’d see outperformance by cyclical stocks. Cyclicals are the first to fall in
a recession, so this may be a bit of recession fear. As for good news…
The XLU-ETF (Utility stocks) is underperforming the
S&P 500. If investors were really
worried about stock performance, they’d be buying Utilities. Taken together, these two indicators are
neutral.
My daily sum of 20 Indicators remained +8 (a positive
number is bullish; negatives are bearish) while the 10-day smoothed version
that negates the daily fluctuations improved from +20 to +31. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term.
I remain bullish.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: 0
Most Recent Day with a value other than Zero: -1 on 3
July (Bollinger Band, top-indicator was bearish. This signal has expired.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or better is a Buy
Sign.
MOMENTUM ANALYSIS:
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…
“Microsoft
climbed as high as $139.22 on Thursday after Cowen initiated coverage of
Microsoft with an outperform rating and a $150 price target.” Story at…
I continue to hold MSFT and XLK as trading positions
while collecting dividends.
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
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, the PRICE, VIX and VOLUME indicators were
positive; the SENTIMENT, indicator was neutral. Overall the Long-Term Indicator
remained Bullish.
