ISM MANUFACTURING (Reuters)
“U.S. manufacturing activity slowed to near a three-year
low in June, with a measure of new orders received by factories tumbling, amid
growing anxiety over an escalation in trade tensions between the United States
and China…The Institute for Supply Management (ISM) said its index of national
factory activity dropped to 51.7 last month…” Story at…
CONSTRUCTION SPENDING (CNBC)
“Investment in private construction projects dropped to
its lowest level in nearly 2-1/2 years. The Commerce Department said on Monday
construction spending declined 0.8%, the biggest drop since last November.” Story at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.8% to 2964.
-VIX dropped about 7% to 14.06.
-The yield on the 10-year Treasury rose to 2.027%.
I measure Sentiment as %-Bulls (Bulls/{bulls+bears})
based on the amounts invested in Rydex/Guggenheim mutual funds and I track it
on a 5-day basis. I read all the time how the various surveys of investors say
one thing or another. I trust my value
above theirs because mine is based on how investors are actually positioned,
not opinions. With those opinion surveys, you frequently find investors who say
they are bearish while they are fully invested. My numbers don’t have that
problem.
As of Friday, my sentiment value was 90%-Bulls. This is
very high and may soon become so bullish that it is bearish. The sell point is
currently 92%-Bulls (based on a standard deviation analysis of the dot.com sentiment value) so this indicator is not too far from issuing a sell. At
these elevated levels, this is a strong signal and we will need to examine other
indicators for confirmation. For now, most indictors are bullish even as the
Sentiment indicator remains an elevated “neutral”.
My daily sum of 20 Indicators remained +5 (a positive
number is bullish; negatives are bearish) while the 10-day smoothed version
that negates the daily fluctuations improved from +1 to +2. (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
Today’s Reading: -1
Most Recent Day with a value other than Zero: -1 on 1
July (Late-Day action, top-indicator was bearish.)
(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…
MONDAY 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
Monday, the PRICE and VOLUME indicators were positive; VIX
and SENTIMENT indicators were neutral. Overall the Long-Term Indicator switched to BULLISH.
