FOMC MINUTES (fxstreet)
“According to the minutes from the Federal Reserve’s
July 30-31 monetary policy meeting, a couple of Fed policymakers
voiced their preference to make a 50 basis point rate rate cut in July
rather than a 25 basis point cut to address the low inflation.” Story at…
EXISTING HOME SALES (MarketWatch)
“Sales of previously-owned homes edged up 2.5% in July,
as mortgage rates offset the affordability crunch caused by high home prices at
the margins.” Story at…
CRUDE OIL INVENTORIES (OilPrice.com)
“Oil prices held steady on Wednesday morning after the Energy
Information Administration today reported a
draw of 2.7 million barrels in crude oil inventories. Analysts had expected a draw, after yesterday the API also reported
lower inventories…” Story at…
BANK OF AMERICA CEO – NO RECESSION (MarketWatch)
“Bank of America Corp.’s CEO Brian Moynihan says he
doesn’t see a recession in the offing because the U.S. consumer remains
healthy.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.8% to 2924.
-VIX fell about 10% to 15.80.
-The yield on the 10-year Treasury rose to 1.591%. (Looks
like the Bond Ghouls think the correction is over.)
Our MACD analysis of breadth is still bearish and that is
concerning. When we look at the “Breadth
vs. S&P 500 Top indicator” we see that it has improved a lot since 23 July
when it signaled a top, but it has stalled over the last week or so. This
correction has ended so soon (seemingly) that the indicator has not caught up
yet. So, I won’t get too worried, unless it begins falling. Also, Breadth
(measured as % of stocks advancing over the last 10-days on the NYSE) was 55%
today and that’s a good number.
-MACD of S&P 500 price had a bullish crossover today and
that’s good news.
-Smart Money (late day action) is looking bullish.
-The S&P 500 is back above the 100-dMA, but the Index
is 0.8% below its 50-dMA.
Overall, my daily sum of 20 Indicators remained +8
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -63 to -42.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
I don’t see many negative signs at this point. Utilities
are outperforming the S&P 500, but that is most likely a hold-over from the
correction. The Fosback long-term indicator is still negative, but this sign is superseded by the positive McClellan
Oscillator that cancels out Fosback Indicators. It is based on the 50-dEMA of
new-high/new-low data so this will take a while longer to clear fully.
I am bullish for the near term.
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, but this is actually not a negative since the McClellan Oscillator is
positive and that cancels the Fosback indicators.
- Most Recent Day with a value other than Zero: -1 on 21
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained 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 VOLUME, VIX, SENTIMENT and PRICE Indicators were neutral. Overall, the
Long-Term Indicator remained HOLD.
