CRUDE INVENTORIES (OilPrice.com)
“Crude oil prices continued higher today after the Energy
Information Administration reported a 10-million-barrel draw in crude oil
inventories. The report followed the American Petroleum Institute’s estimate of
an 11.1-million-barrel draw
in inventories, released yesterday.” Story at…
INVERTED YIELD SPREAD AGAIN (Advisor Perspectives)
“The lead time for recessions is quite a range - after
going negative, recessions have begun anywhere from 16 to 62 weeks later.”
Details at…
https://www.advisorperspectives.com/dshort/updates/2019/08/27/treasury-snapshot-inverted-yield-curve
TECHNICALLY SPEAKING EXCERPT (Real Investment Advice)
“The reason we suggest selling any rally is because, until
the pattern changes, the market is exhibiting all traits of a ‘topping
process.’ As the saying goes, a market-top is not an event; it’s a process.” –
Lance Roberts. Commentary at…
https://realinvestmentadvice.com/technically-speaking-market-risk-is-rising-as-retail-sends-warning/
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.7% to 2888.
-VIX dropped about 5% to 19.35.
-The yield on the 10-year Treasury rose to 1.481%.
A number of indicators reversed to the bullish side today…
-My daily sum of 20 Indicators dropped from -13 to
zero (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from -36
to -21. (These numbers sometimes change after I post the blog based on data
that comes in late.) The big turnaround is a reminder to pay attention to the
10-day version.
Today was a very strong day in several categories. 82% of
the volume was up-volume on the NYSE.
Another up-volume day like today would once again be a “correction-over”
signal. 71% of stocks on the NYSE were up today. That’s a good number too. The
new-high/new-low spread (difference between the two) improved today and that hadn’t
happened in the prior 3 sessions. Still, it would be nice to see more new-highs
especially since new-lows are still outpacing new-highs.
The McClellan oscillator flipped above zero today and
that cancels the Fosback bearish Logic Indicator.
My opinion hasn’t changed; the index would need to close below 2841 with
deteriorating internals before I get too worried. For the time being though, I
remain cautiously optimistic.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -2
-The Long-term Fosback Logic Index short and long-term
indicators were bearish, but these indicators aren’t valid now because the
McClellan Oscillator is positive. .
- Most Recent Day with a value other than Zero: -2 on 28
August.
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or better is a Buy
Sign.
MOMENTUM ANALYSIS:
Just a reminder…During corrections, momentum is
generally not giving a very accurate picture, or at least it is giving a
correction picture – it will change significantly when the correction ends.
During the correction, Utilities will generally outperform as will similar Dow
stocks, like Verizon. Momentum here is a short-term call.
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals reversed
from NEGATIVE to 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 20 August 2019. This is a conservative balanced position
appropriate for a retiree.
INTERMEDIATE / LONG-TERM INDICATOR
Wednesday,
the VIX indicator was negative; VOLUME, SENTIMENT and PRICE Indicators were
neutral. Overall, the Long-Term Indicator improved to HOLD. As
previously noted, since we are already close to re-testing the correction low,
I see no point in exiting the market until we see a break below the prior low
(2841) with deteriorating signs. I’ll remain fully invested for the time being.
