JOBLESS CLAIMS (Reuters)
“The number of Americans filing applications for
unemployment benefits increased moderately last week, pointing to still strong
labor market conditions despite signs that economic activity was
slowing…Initial claims for state unemployment benefits rose 8,000 to a
seasonally adjusted 216,000 for the week ended July 13…” Story at…
PHILLY FED INDEX (Reuters)
“The Philadelphia Federal Reserve said on Thursday its
barometer on business activity in the U.S. Mid-Atlantic region jumped to its
strongest level in a year in July amid ongoing trade disputes between the
United States and its trading partners. The regional central bank’s index rose to 21.8, the
highest level since July 2018.” Story at…
LEI (Conference Board)
“The Conference Board Leading Economic Index® (LEI) for
theU.S. declined 0.3 percent in June to 111.5 (2016 = 100), following no change
in May, and a 0.1 percent increase in April. “The US LEI fell in June, the
first decline since last December, primarily driven by weaknesses in new orders
for manufacturing, housing permits, and unemployment insurance claims,” said
Ataman Ozyildirim, Senior Director of Economic Research at The Conference
Board. “For the first time since late 2007, the yield spread made a small
negative contribution. As the US economy enters its eleventh year of expansion,
the longest in US history, the LEI suggests growth is likely to remain slow in
the second half of the year.” Press release at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.4% to 2995.
-VIX dropped about 13% to 13.53.
-The yield on the 10-year Treasury dipped to 2.023%.
There is a divergence between the advance-decline line vs
the S&P 500. If it continues, I’ll get concerned. This is a pretty good top
indicator. A number of other signals are
stretched, too.
My daily sum of 20 Indicators dropped from -2 to -6 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations slipped from +33 to +22. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
We’re headed for a pullback, but I’m guessing it won’t be
too dramatic. I don’t like to guess, so we’ll just have to watch the
indicators. If signals keep heading
down, I’ll be cutting stock holdings.
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 15
July (The S&P 500 was 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.
We haven’t got any top-indicators calling sell now,
but we must remember that these indicators don’t always signal a top. They are best when the market climbs to a
blow-off top. We often have a top without the indicators signaling one.
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 Corp. blew away earnings expectations Thursday
thanks to continuing strong growth from its Azure cloud offering and LinkedIn,
sending its trillion-dollar valuation even higher in late trading.” Story at…
I continue to hold MSFT and XLK as trading positions
while collecting dividends.
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained 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
Thursday, the PRICE indicator was positive; the
SENTIMENT, VIX and VOLUME indicators were neutral. Overall the Long-Term
Indicator remained Neutral/HOLD.
