JOBLESS CLAIMS (Bloomberg)
“Filings for U.S. unemployment benefits declined for the
second time in three weeks, a sign the labor market is holding up, data showed
Wednesday ahead of the June jobs report later this week. Jobless claims dropped
to 221,000 in the week ended June 29…” Story at…
ADP EMPLOYMENT (YahooFinance)
“Job growth in the U.S. private sector slowed again
during the month of June, according to a new report from ADP Research Institute and Moody’s. The U.S.
private sector added a disappointing 102,000 positions in June…” Story at…
ISM NON-MANUFACTURING INDEX (advancedmanufacturing.org)
“Manufacturing slowed in June, with demand at “no growth”
levels, the Institute for Supply Management said today. The Tempe, Ariz.-based
group’s manufacturing index, known as the PMI, slipped to 51.7 percent last
month…” Story at…
Here’s a chart from Advisor Perspectives on one data series within the Index.
CRUDE INVENTORIES (OilPrice.com)
“A day after the American Petroleum Institute’s estimated a
5-million-barrel crude oil inventory draw and failed to reverse oil prices’
fall, the Energy Information Administration failed at that, too by reporting
only a moderate draw.
FACTORY ORDERS (Reuters)
“New orders for U.S.-made goods fell for a second straight
month May while shipments barely rose, pointing to continued weakness in
manufacturing.
Factory goods orders decreased 0.7%, weighed down by weak
demand for transportation equipment…” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.8% to 2996.
-VIX dropped about 3% to 12.57.
-The yield on the 10-year Treasury slipped to 1.950%.
At today’s new all-time high for the S&P 500, 8.4% of
stocks on the S&P 500 made new 52-week highs, so the participation is
broadening at new-highs. That’s a bullish sign. (For additional discussion of
this stat at all-time highs see yesterday’s blog.)
I am a little surprised to see the advance continue for
5-days straight without a down-day. As a result, we note that the Bollinger
Band indicator is overbought and RSI is very close to overbought. The
overbought/oversold ratio (a measure using advance-decline stats) is also
overbought, but it is so early that I tend to ignore it.
The good news is that only 13-days have been up-days in
the last month of trading and that’s not excessive. This market can easily go
higher.
My daily sum of 20 Indicators improved from +2 to +8 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -1 to +5. (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: -1
Most Recent Day with a value other than Zero: -1 on 3
July (Bollinger Band, 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)
The top ranked ETF receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF. While momentum isn’t stock performance per
se, momentum is closely related to stock performance. For example, over the
4-months from Oct thru mid-February 2016, the number 1 ranked Financials (XLF)
outperformed the S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked
in the top 3 Momentum Plays for 52% of all trading days in 2017 (if I counted
correctly.) XLK was up 35% on the year while the S&P 500 was up 18%.
*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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to BULLISH 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
Wednesday,
the PRICE, VIX and VOLUME indicators were positive; the SENTIMENT indicator was
neutral. Overall the Long-Term Indicator improved from HOLD to BULLISH.
