PAYROLL REPORT (Yahoo.com)
“Nonfarm
payrolls: 136,000 vs. +145,000 expected and +168,000 in
August
Unemployment
rate: 3.5% vs. 3.7% expected and 3.7% in August
Average
hourly earnings MoM: +0.00% vs. +0.2% expected and +0.4%
in August
Average
hourly earnings YoY: +2.9% vs. +3.2% expected and +3.2% in August” Story
at…
MARKIT SERVICES PMI (Advisor Perspectives)
“The August US Services Purchasing Managers' Index
conducted by Markit came in at 50.9 percent, up 0.2 from the final August
estimate of 50.7…“A disappointing service sector PMI follows news of lacklustre
manufacturing and means the past two months have seen one of the weakest back-to-back
expansions of business activity since 2009, sending a signal of slower GDP growth
in the third quarter.” Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.4% to 2952.
-VIX fell about 11% to 17.04.
-The yield on the 10-year Treasury slipped a bit to 1.530.
VIX has fallen 18% over the last two trading sessions. That
strongly supports our theory that the S&P 500 bottomed on the morning of 3
October. We cited a number of indicators last Thursday that suggested the
bottom was in on this weak pullback.
Today was a statistically significant up-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically significant up-day is followed by a down day about
60% of the time.
My daily sum of 20 Indicators improved from -11 to
-9 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations dropped from -37 to
-47. (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. This isn’t
much of an improvement in the indicator total, still…
I am bullish now. That
is counter to all the economic news that seems to be trending down, so I will
pay close attention to the market. The market may still tell us to get bearish, but indicators are improving, even while they remain in negative territory.
I won’t make any drastic investment changes unless I get
a sell-signal from the long-term indicator. I will reset some trading positions
Monday. I was, unfortunately, too busy Friday and further into the
weekend. That’s why I am posting Friday’s
report today.
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: +2 on 3
October.
(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 VOLUME, VIX, PRICE and
SENTIMENT Indicators were neutral. Overall, the Long-Term Indicator remained
HOLD.
