EMPIRE STATE MANUFACTURING (MarketWatch)
“The New York Fed’s Empire State manufacturing survey’s
main index rebounded 12.9 points to 4.3 in July, the New York Fed said Monday. Economists had expected a
reading of 0.5, according to Econoday. The gain partially reverses a steep fall
in June…”
A BEAR MARKET UNDERWAY? (The Felder Report)
“The latest margin debt figures were released last week
and they show leveraged investors continue to delever. In fact, margin debt is
now falling at an annual rate of 15%, a level of derisking that has always been
accompanied by a minimum 20% decline in the S&P 500 over the past half
century.” Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was unchanged at 3014.
-VIX rose about 2% to 12.68.
-The yield on the 10-year Treasury slipped to 2.092%.
The S&P 500 made a new high Friday while 5.6% of all
issues traded on the NYSE made new-highs.
The 5-year average shows that 6.7% of NYSE issues typically make new
highs at an S&P 500 new-high. We can conclude that Friday’s number is about
normal. If the % of new-highs on the NYSE were to fall below 3% at a new-high
for the S&P 500, I’d be very concerned. We want to see a lot of
participation (good breadth) when the markets make new highs.
While there are a number of pundits calling for a bear
market, so far, the evidence is not enough to convince me. We’ll just have to
keep an eye on the indicators.
My daily sum of 20 Indicators dropped from +10 to +2 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations slipped from +47 to +44. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
I am cautiously bullish. Cautious because the markets are
getting stretched.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -1
Most Recent Day with a value other than Zero: -1 on 15
July (The S&P 500 is too far ahead of its 200-day average w/sentiment,
top-indicator.)
(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.
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals dipped
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
Monday, the PRICE indicator was positive; the SENTIMENT,
VIX and VOLUME indicators were neutral. Overall the Long-Term Indicator slipped
to Neutral/HOLD.
