PAUL SCHATZ COMMENTARY EXCERPT (Heritage Capital)
“I remain confident that Dow 28,000 is up next with a
chance at 30,000 in Q1 2020. The bears just continue to have it wrong… I may sound
like a broken record, but use weakness as a buying opportunity until proven
otherwise. It’s been an absolute loser’s game to sell weakness.” – Paul Schatz,
CEO, HeritageCapital. Commentary at…
MARKET REPORT / ANALYSIS
Monday the S&P 500 rose about 1.1% to 2970.
-VIX fell about 6% to 14.57.
-The yield on the 10-year Treasury slipped to 17.09.
My daily sum of 20 Indicators declined from +4 to -1
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
version that negates the daily fluctuations slipped from -52 to -58.
(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.
In spite of the negative overall sum of indicators, we
see a number of important bull signs. My MACD of Breadth has turned positive
and the MACD of S&P 500 price is very close to a buy signal. Money Ttrend
is positive and the new-high/new-low data looks good.
I remain bullish.
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…
MONDAY 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 60% invested in
stocks as of 7 Oct 2019 (up from 50%). This is a conservative balanced position
appropriate for a retiree. You ay wish to have a higher or lower % invested in stocks depending on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Monday, the VIX indicator was
positive; VOLUME, PRICE and SENTIMENT Indicators were neutral. Overall, the
Long-Term Indicator remained HOLD.
