“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
JOLTS (Bloomberg)
“U.S. job openings were little changed in June at
elevated levels, adding to signs that the labor market remains generally
healthy.
There were 7.35 million positions waiting to be filled…”
Story at…
THERE’S MORE TO THIS SLIDE THAN TRUMP (MarketWatch)
“Something is wrong with the global economy. It's not
functioning as it "should," or traditionally has. Actually, the world
economy seems downright dysfunctional…The U.S. economy, meanwhile, is showing
some signs of similarly unusual behavior, but it doesn't appear as abnormal as
the rest of the global economy…The rest of the world is more dependent on
exports, particularly to the U.S., than the U.S. is on exports to the rest of
the world. By disrupting U.S. trade relations with the rest of the world, Trump does
more economic damage over there than over here.” – Ed Yardeni,
president of Yardeni Research Inc. Story at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1.3% to 2882.
-VIX dropped about 18% to 24.59.
-The yield on the 10-year Treasury slipped to 1.708%.
(The Bond Ghouls don’t think the correction is over.)
Not much has changed as far as indicators are concerned.
The Hindenburg Omen cleared today, so that’s seemingly one
less negative, but not really. Once triggered a Hindenburg Omen remains in
effect for 30-days or until the McClellan Oscillator goes positive. Under that
rule, we still expect a crash. (It’s the Hindenburg for a reason.)
The long-term Fosback indicator is still giving a
sell-signal, “sharp-drop” warning. Both new-highs and new-low are too high and
have been for an extended period.
MACD of Breadth is still negative.
The Index is now 3.3% above its 200-dMA (2790) and that
is a point that might provide a stopping point for this pullback, but we don’t
really know.
Overall, my daily sum of 20 Indicators slipped
from -13 to -15 (a positive number is bullish; negatives are bearish) while the
10-day smoothed version that negates the daily fluctuations declined
from -23 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.
There are only 20 short term indicators – 15 are
negative today. That’s pretty bearish.
Bollinger Bands remain “oversold.” (RSI is not.) Unfortunately,
oversold conditions can remain for some time, so the news is not all that
encouraging.
It still looks like we are headed down. Breadth vs the
S&P 500 is still bearish.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -1
- Breadth vs the S&P 500 was negative.
- Most Recent Day with a value other than Zero: -1 on 6
Aug (The S&P 500 was
stretched relative
to breadth.)
(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 not
giving a very accurate picture. Utilities will generally outperform as will
similar Dow stocks, like Verizon.
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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
NEGATIVE 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 30% invested in
stocks as of 5 August 2019.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday,
the VIX and VOLUME indicators were negative. The SENTIMENT and PRICE indicators
were neutral. Overall, the Long-Term Indicator is SELL as of 5 August.
