“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
CONSTRUCTION SPENDING (housingwire.com)
"Spending on U.S. construction during July was estimated
at a seasonally adjusted annual rate of $1.30 trillion, rising 0.1% from
the revised June estimate…” Story at…
ISM MANUFACTURING (CNN.com)
“American manufacturing shrank for the first time in
three years this summer. On Tuesday, the Institute of Supply Management's
manufacturing index came in at 49.1 for the month of August — its lowest level
since January 2016.” Story at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dropped about 0.7% to 2906.
-VIX rose about 4% to 19.66.
-The yield on the 10-year Treasury rose to 1.625%.
On the 28th an 29th we saw back to
back days with greater than 80% up-volume. This is a very bullish move (when it
occurs soon after a 90% down-day) that usually is a bottom (or post bottom)
signal. The last time this happened (16 and 19 August) we were Trumped and
Chinatized with tariffs. Here we go
again. Some US tariffs went into effect today. Then there’s the ISM number;
that didn’t help either.
My daily sum of 20 Indicators slipped from +4 to -3
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from +3 to -7.
(These numbers sometimes change after I post the blog based on data that comes
in late.)
Futures are up as I write this. We.ve made a triple bottom
in the 2841 region with two reversal signals on high-volume. I think we go up from here. I have been wrong before, though. We’ll see.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -1
-The Long-term Fosback Logic Index indicator was bearish,
but this indicator isn’t valid now because the McClellan Oscillator remains
positive.
- Most Recent Day with a value other than Zero: -1 on 30
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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals slipped
to 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
Tuesday,
the VIX indicator was negative; VOLUME, SENTIMENT and PRICE Indicators were
neutral. Overall, the Long-Term Indicator remained to HOLD.
