(The comment applies equally to Republicans and
Democrats. Unfortunately, we’ll never see term limits in the U.S.)
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
NEW HOME SALES (MarketWatch)
“Sales of newly-constructed homes in the U.S. increased
7.1% on a monthly basis in August to a seasonally-adjusted annual rate of
713,000, the government reported Wednesday. That’s up from a revised rate of
666,000 in July, and is just shy of the 12-year high set in June.” Story at…
CRUDE OIL INVENTORIES (OilPrice.com)
“Crude oil deepened its latest losses after the Energy
Information Administration reported a 2.4-million-barrel build in crude oil
inventories for the week to September 20.” Story at…
THE DISTURBING CULT OF GRETA THUNBERG [CLIMATE ACTIVIST]
(The Blog Mire)
“Causes which are backed up by incontrovertible facts do
not need the aid of slightly unnerving and emotive teenage girls to lead the
charge. On the contrary, slightly unnerving and emotive
teenage girls might be thought by a rational society to be somewhat of a
hindrance to the facts, since they are likely to detract from them and move the
issues from the realm of reason and rational discourse to emotion and
feelings…On a societal level, frankly it all has the rather unpleasant whiff of
a deliberate campaign to shame people into silence by the exploitation of a
frankly very disturbed child. And the fact that there are people who are
prepared to use this sort of emotive tactic to further their agenda is really
quite sinister, and doesn’t bode well. We are perilously close to becoming a
society entirely governed by emotion over reason, with the results being seen
in the increasing inability of large swathes of people to even accept the
possibility that views other than their own should be allowed.” – Rob Slain,
British author and blogger.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.6% to 2985.
-VIX dropped about 6% to 15.96.
-The yield on the 10-year Treasury rose to 1.739.
On 12 September the S&P 500 topped at 3010. Since
then, the Index has drifted mostly down with some relief today. As of today,
the Index is only down 0.8% off that high. We haven’t seen many bearish topping
indicators; only RSI was giving an overbought indication. Today, RSI has fallen
all the way back to 54. That is a strong neutral signal. There are no top
indicators in play today. We still have negative signs; just none that scream “top”.
BEAR SIGNS
-Up-volume is headed down.
-New-highs are continuing to fall.
-Sum of Indicators is leaning bearish.
-XLI is underperforming the S&P 500. Cyclicals should
out-perform in a bull market.
-XLU is outperforming the S&P 500. Utilities should under-perform the Index in a
Bull market.
-We still have a Distribution Day warning because there
have been 6 in the last 25 days.
-The MACD of Breadth is bearish.
-MACD of S&P 500 price is bearish.
We have some bull signs.
BULL SIGNS
-Smart Money is improving.
-VIX improved today and is now in Neutral territory.
-Breadth as measured by the % of NYSE stocks advancing over
the last 10-days is still above 50%.
-The size of up moves has been higher than down moves
over the last month.
We can’t say there won’t be a correction; we can hope
that the market will move up from here. The Smart Money may be giving us a hint
that it will, but we’ll need to see them buying consistently to be more
confident.
If a correction does begin, the 50-dMa is 2950. That’s an important point if we are to avoid
a correction. The 100-dMA is about 2922; that was around the S&P 500 high
in 2018. That’s about where we might
expect a pullback to end if we do get a downturn.
My daily sum of 20 Indicators remained -3 (a
positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations slipped from +42 to +27.
(These numbers sometimes change after I post the blog based on data that comes
in late.) A reminder: Most of these indicators are short-term.
I probably won’t make any drastic investment changes
unless I get a sell-signal from the long-term indicator. I may take profits in
a couple of trading positions. (I haven’t yet.)
I remain bullish, at least in the sense that this doesn’t
look like a major correction and we are far from certain there will be a
correction at all. Actually, I think we go up from here, but we’ll see.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: 0
Most Recent Day with a value other than Zero: -1 on 23
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…
WEDNESDAY 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
Wednesday, the PRICE indicator
was positive; VOLUME, VIX and SENTIMENT and Indicators were neutral. Overall,
the Long-Term Indicator remained HOLD, but is now leaning Bullish.
