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JOBLESS CLAIMS (MarketWatch)
“One week after falling sharply, the number of people who
applied for U.S. unemployment benefits in mid-September inched higher, the government said Thursday.
Initial jobless claims, a rough way to measure layoffs,
rose 2,000 to 208,000 in the seven days ended Sept. 14…” Story at…
PHILADELPHIA FED INDEX (Morningstar)
"Manufacturing activity moderated in the mid-Atlantic
region in September, though growth is likely to sustain over the next six
months, the Federal Reserve Bank of Philadelphia said Thursday. The Philly Fed's Manufacturing Business Outlook Survey's
index of business activity declined to 12 in September…” Story at…
LEADING ECONOMIC INDICATORS (Conference Board via
prnewswire)
“The Conference Board Leading Economic Index® (LEI) for
the U.S. was unchanged in August, remaining at 112.1 (2016 = 100),
following a 0.4 percent increase in July, and no change in June. ‘The US LEI remained unchanged in August, following a
large increase in July…The recent trends in the LEI are consistent with a slow
but still expanding economy, which has been primarily driven by strong consumer
spending and robust job growth.’" Press release at…
MEAN REVERSION (Real Investment Advice)
“Mean reversion promises a period of below average
returns. Whether such an adjustment happens over a few months as occurred in
1987 or takes years, is debatable. It is also uncertain when that adjustment
process will occur. What is not debatable is that those aware of this
inevitability can be on the lookout for signs mean reversion is upon us and
take appropriate action.” - Michael Lebowitz and Jack Scott
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was unchanged at 3007.
-VIX rose about 1% to 14.05.
-The yield on the 10-year Treasury slipped to 1.784.
Over the last 4 days, the S&P 500 has gone nowhere,
but we have seen some improvement in new-highs. Over the 4 days, the % of
issues making new highs on the NYSE has improved from 1.9% to 3.6% today. A number below 3% is worrisome since it demonstrates
a very narrow advance, especially since the index is only about 1% below the
all-time high. At the last all-time high almost 7% of issues made new
highs. We need to see the new-highs
improve or we may see trouble; however, the news is not all bad.
The good news is that the % of stocks that have advanced
over the last 10-days is 55%. By that
measure, the advance is not in critical condition, but we are concerned.
My daily sum of 20 Indicators slipped from +2 to +1
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations slipped from +78 to +73.
(These numbers sometimes change after I post the blog based on data that comes
in late.)
There have only been 3 down days in the last 10; and 7
down-days in the last month. RSI is neutral but very nearly overbought. We’re due for some consolidation. We can only
hope that we don’t see a big retreat. We might, instead, see a continuation of
the holding pattern.
Overall, I remain bullish.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: 0
-RSI was negative.
- Most Recent Day with a value other than Zero: -1 on 18
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:
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
The top ranked ETF receives 100%. The rest are then ranked
based on their momentum relative to the leading ETF. While momentum isn’t stock performance per
se, momentum is closely related to stock performance. For example, over the
4-months from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed
the S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked in the top 3
Momentum Plays for 52% of all trading days in 2017 (if I counted correctly.)
XLK was up 35% on the year while the S&P 500 was up 18%.
*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…
THURSDAY 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
Thursday, the VOLUME, PRICE,
SENTIMENT and VIX Indicators were neutral. Overall, the Long-Term Indicator
remained HOLD.
