FED BEIGE BOOK (Marketwatch)
“Economic activity in the crucial non-financial service
sector was either steady or improving across the country through the end of
August, according to the “Beige Book” survey released by the Federal Reserve on
Wednesday...The overall economy expanded at the same “modest pace”
seen in earlier reports this year, the survey said.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.1% to 2938.
-VIX fell about 12% to 7.33.
-The yield on the 10-year Treasury rose to 1.469%. (I had
a typo here.)
Today’s market internals looked healthier than we have
seen in a while. 52-week new-highs outpaced new-lows 219 to 30. 81% of stocks advanced on the NYSE. The
volume news was good, too.
88% of the volume was up-volume today. The closing price was
high enough to suggest further momentum in the future. While we didn’t quite
see a 90% up-volume day, 88% is pretty close and I take this as a very bullish
sign that reinforces the strong market action (back-to-back high advancing-volume
days) I mentioned Tuesday.
My daily sum of 20 Indicators improved from -3 to +2
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations dropped from -7 to -13.
(These numbers sometimes change after I post the blog based on data that comes
in late.)
Today we saw more bullish signs. I think we go up from
here.
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 4
September.
(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 improved
but 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
Wednesday,
the VIX, VOLUME, SENTIMENT and PRICE Indicators were neutral. Overall, the
Long-Term Indicator remained to HOLD.
