RETAIL SALES (Reuters)
“U.S. retail sales increased more than expected in
August, pointing to solid consumer spending that should continue to support a
moderate pace of economic growth… Retail sales rose 0.4% last month, lifted by
spending on motor vehicles, building materials, healthcare and hobbies.” Story
at…
SENTIMENT (MarketWatch)
"The
University of Michigan said its consumer-sentiment index
rebounded modestly in September to a reading of 92 from a three-year low of
89.8 in late August." Story at...
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.1% to 3007.
-VIX dipped about 3% to 13.74.
-The yield on the 10-year Treasury increased to 1.899%.
Today, we had a down day on the S&P 500. As of
yesterday, there had only been 2 down-days in the last 10, so we were due for a
breather.
Finally, the Fosback New-high/New-Low Logic Index has
reverted to a neutral position. To be
clearer, this indicator has been neutral for a while, based on the positive
McClellan Oscillator, but today the moving averages of the new-high/new low
numbers again improved – this time enough to show clearly that the new-high
new-low data is no longer bearish. I’d
say the numbers are now bullish, but Fosback’s Logic Index is not bullish
yet.
We did, however, see the Relative Strength Index (RSI, 14-day,
SMA) turn negative at >80. Relative Strength measures the size of up-moves
vs. all-moves on a 14-day moving average basis and presents the result as a
percentile. For example; if the RSI is 85, it means that the size of up-moves
are in the 85th percentile when compared to all moves over the 14-day
period. If ALL moves had been up, RSI would be 100 – a definite short term
sell indicator. For my purposes, 30 is oversold (suggesting a turn-around to
the upside) and 80 is overbought. If the up-moves and down-moves are equal in
size over the 14-day period, RSI would be 50.
Since we had a down-day today, today’s jump in RSI is as
much about the value of the S&P 500 15-days ago as it was today’s small
move; we’ll see where this indicator goes.
My daily sum of 20 Indicators decreased from +13
to +10 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations improved from +62
to +70. (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
-RSI was negative.
- Most Recent Day with a value other than Zero: -1 on 13
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)
*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…
Over the last 2 months, Apple is the biggest gainer, up
almost 10%. Home Depot, currently tops in momentum is up a little over 7%.
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 VOLUME and VIX
indicators were positive; SENTIMENT and PRICE Indicators were neutral. Overall,
the Long-Term Indicator improved to BUY. We issued a BUY signal in the
morning of 19 August, so today’s buy-signal is not important; it does confirm
again that the market is doing well.
