RETAIL SALES (MarketWatch)
“Sales at U.S.
retailers rose solidly in June for the fourth month in a row, pointing to a
strong rebound in consumer spending in the second quarter that suggests the
economy is not as fragile as the Federal Reserve apparently believes.
Retail sales
increased 0.4% last month…” Story at…
INDUSTRIAL PRODUCTION (Reuters)
“U.S. manufacturing output accelerated in June, climbing
for the second straight month, thanks in large part to increased production of
motor vehicles and parts.
The Federal Reserve said Tuesday manufacturing production
rose 0.4% last month…” Story at…
MANUFACTURERS MOVING OUT OF CHINA (WSJ)
“U.S. manufacturers are shifting production to countries
outside of China as trade tensions between the world’s two biggest economies
stretch into a second year. Companies that make Crocs shoes, Yeti beer coolers,
Roomba vacuums and GoPro cameras are
producing goods in other countries…Furniture-maker Lovesac Co. is making about 60% of its furniture in
China, down from 75% at the start of the year.” Story at…
My cmt: They aren’t coming to the US (so far) so this
doesn’t help US workers, but those who claim that tariffs only hurt US consumers are wrong. I suspect China is under-estimating US resolve.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 0.3% to 3004.
-VIX rose about 1% to 12.86.
-The yield on the 10-year Treasury rose to 2.105%.
The S&P 500 is outperforming the XLU-ETF (Utilities)
and cyclical industrials (XLI-ETF) are outperforming the S&P 500 over the
near term. These are both bullish signs. We’ve been following the new-highs at
S&P 500 all-time highs and that is bullish too.
Monday (yesterday) the S&P 500 made a new all-time high
while 6.6% of all issues traded on the NYSE made new-highs. That stat improved over Fridays’ number. The
5-year average shows that 6.7% of NYSE issues typically make new highs at an
S&P 500 new-high so there’s no alarm here.
The long-term average of new-highs is rising too, another
bullish indicator.
I don’t see a big drop coming. A small one is always
possible. There are negative signs, though, and these might over-power the
positive.
Bollinger Bands are nearly overbought as is RSI. Breadth
vs the S&P 500 is stretched, but not yet bearish. The most troubling sign
might be my MACD analysis of breadth – it may be turning bearish soon.
My daily sum of 20 Indicators dropped from +2 to -2 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations slipped from +44 to +37. (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: 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.
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…
I continue to hold MSFT and XLK as trading positions
while collecting dividends.
MONDAY 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
Tuesday, the PRICE indicator was positive; the SENTIMENT,
VIX and VOLUME indicators were neutral. Overall the Long-Term Indicator remained
Neutral/HOLD.
