DURABLE ORDERS (MarketWatch)
“Orders for durable goods rose 2.1% in July, the Commerce
Department said Monday. It is the second straight monthly gain… Shipments of
non-defense capital goods fell 0.7% in July, largest drop since Oct. 2016.”
Story at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 1.1% to 2878.
-VIX dipped about 3% to 19.32.
-The yield on the 10-year Treasury slipped to 1.526%.
As we noted over the weekend, Friday’s low tested the
prior correction low of 2841. While the test didn’t meet my buy signals, that
isn’t very important. We already had a buy-signal on the back-to-back, high up-volume
days on 16 and 19 August. There is no requirement for us to have another test
of the low, although a retest might give us more information. The news has “trumped” the technicals, so for
the time being we’ll watch market action and hope we see continued improvement.
The chart shows a triple bottom in the general region of 2841. The chart looks
bullish to me even though my indicators aren’t.
My daily sum of 20 Indicators dropped from -7 to -8
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -34 to -33.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
The index would need to close below 2841 with
deteriorating internals before I get too worried. I remain somewhat worried
since the Fosback High/low logic indicator is back in play and is issuing a “big
drop” warning. For the time being though, I remain optimistic.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -1
-The Long-term Fosback Logic Index indicators was bearish.
This is a concern since the McClellan Oscillator has turned negative.
- Most Recent Day with a value other than Zero: -1 on 26
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 – it will reverse 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…
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 20 August 2019. This is a conservative balanced position
appropriate for a retiree.
INTERMEDIATE / LONG-TERM INDICATOR
Monday,
the VIX indicator was negative; VOLUME, SENTIMENT and PRICE Indicators were
neutral. Overall, the Long-Term Indicator switched to HOLD.
