PERSONAL SPENDING (Reuters)
"U.S. consumer spending barely rose in August and
business investment remained subdued amid lingering trade tensions, prompting
economists to slash their economic growth estimates for the third quarter…Consumer
spending, which accounts for more than two-thirds of U.S. economic activity,
edged up 0.1% last month…” Story at…
PCE PRICE INDEX (fxstreet)
“…the core PCE Price Index, which excludes volatile food
and energy prices, rose to 1.8% on a yearly basis from 1.7% (revised from
1.6%) in July and came in line with the market expectation but stayed below the
Federal Reserve's target rate of 2%.” Story at…
DURABLE ORDERS (MarketWatch)
“Orders for long-lasting or durable goods rose slightly
in August, but the increase was largely military-related in an otherwise soft
report that added to a picture of a slowing U.S. economy…Orders for durable
goods increased 0.2% last month…” Story at…
MICHIGAN SENTIMENT (UnivMichigan)
“Consumer sentiment
improved in September from its depressed August reading due to more favorable
income trends, especially among middle-income households, according to the
University of Michigan Surveys of Consumers.” Story at…
THE REAL REASON FOR IMPEACHMENT? (NYPost)
“…the call for an impeachment inquiry at this point makes
no sense. No one in Congress had even seen the transcript at the time
the call was made. We just endured a two-year federal investigation
into every detail of Trump’s alleged collusion with Russia, with ambiguous
results, and that wasn’t enough to convince the Democrats to impeach him. But a
secondhand report of a diplomatic conversation was enough to spark a national
crisis and remove the chief executive?... Dems’ main target in this inquiry is
their own frontrunner, who poses too many risks for the national party to be
the nominee…it [the impeachment process] will force Joe Biden to exit the race
sooner than later.” Story at…
My cmt: Wow! There’s a conspiracy theory! Adam Schiff had
a tweet several weeks ago that was eerily similar to language in the whistle blower
complaint. A more likely reason that the
Impeachment Inquiry was announced before the phone record and whistleblower complaint
were released is that the Senate Intelligence Committee assisted with writing
the complaint.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 slipped about 0.5% to 2962.
-VIX rose about 0.7% to 17.22.
-The yield on the 10-year Treasury dipped to 1.683.
Markets looked ok until it was announced that the
administration was considering placing constraints on investments in China.
My daily sum of 20 Indicators improved from -6 to
+1 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations dropped from +8 to -1.
(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.
RSI is getting near an oversold indication as is the
Bollinger Band Indicator – those are bullish signs. Smart Money is turning up
and that’s a bullish sign, too.
The S&P 500 has drifted down to the 50-dMA and bounced up from there, so we’ll
need to see if the 50-dMA holds. It still seems that we are closer to an end of
this pullback than the beginning. A test of the recent lows around 2850 is
possible.
I probably won’t make any drastic investment changes
unless I get a sell-signal from the long-term indicator. I took some profits in
a couple of trading positions Thursday since the Short-Term indicator switched
to sell.
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. I still think we go up from here, but as the saying goes,
“Trade what you see; not what you think.” Now, we see short-term indicators are
negative, but this doesn’t look like a major top.
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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
NEGATIVE 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 50% invested in
stocks as of 27 Sept 2019 (down from 55%). This is a conservative balanced
position appropriate for a retiree.
INTERMEDIATE / LONG-TERM INDICATOR
Friday, the PRICE indicator was bullish; the VOLUME, VIX and SENTIMENT Indicators
were neutral. Overall, the Long-Term Indicator remained HOLD.
