“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
PAYROLL REPORT (Bloomberg)
“Weak August job gains signaled the U.S. labor market’s
slowdown is deepening as the trade war with China takes a toll on the economy,
even as some details of the report suggested a recession is far from imminent. Private payrolls rose 96,000, a three-month low…” Story at…
AVG HOURLY EARNINGS (CNBC)
“Average hourly earnings increased by 0.4% in August and
3.2% over the year, better than expected.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.1% to 2979.
-VIX fell about 7% to 15.19.
-The yield on the 10-year Treasury slipped slightly to
1.564%.
We saw late-day selling and a high unchanged volume. The unchanged volume suggests investor confusion
while the late-day selling suggests the Pros are cautious, or at least, they
are taking profits. We’ve seen enough
bullish indicators recently for us to sit back and wait for new highs.
-My MACD of Breadth has remained bullish. The MACD of S&P 500 price turned bullish
2 weeks ago and remains bullish.
-The S&P 500 closed above the 50-dMA for a second day
and that’s good.
-5-10-20 Timer system turned bullish yesterday. (The
5d-EMA and the 10-dEMA are higher than the 20-dEMA.)
-New-highs outpaced new-lows 138 to 20 respectively. Those are good numbers.
-Bollinger Bands were not overbought today.
As always, there are some bearish signs in the mix. The
Overbought/Oversold Index is overbought. The Index is always very early. Money Trend
slipped a little. There has been late-day selling over the last month. Until we
see a lot more top indicators, I will ignore them.
My daily sum of 20 Indicators dipped from +6 to +3
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations improved from -14 to -13.
(These numbers sometimes change after I post the blog based on data that comes
in late.)
I remain bullish.
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 6
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…
FRIDAY 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
Friday, the VIX, VOLUME, SENTIMENT
and PRICE Indicators were neutral. Overall, the Long-Term Indicator remained to
HOLD.
