AUTO SALES (AutoFinanceNews)
“Total light-vehicle sales for the year are on pace to
hit 17.1 million units, down 1.4% from 2018, according to J.D. Power and LMC
Automotive. Toyota notched its best November ever, with
year-over-year sales up 9.2%…Meanwhile, Honda sales climbed 11%...” Story at…
ADP EMPLOYMENT (MarketWatch)
“Private-sector employment slowed sharply in November, payroll
processor ADP said Wednesday. Job growth rose 67,000 in the
month., the smallest increast since May.” Story at…
ISM NON-MANUFACTURING (Reuters)
“U.S. services sector activity slowed more than expected
in November amid lingering concerns about trade tensions and worker shortages…The
Institute for Supply Management (ISM) said on Wednesday its non-manufacturing
activity index fell to a reading of 53.9 in last month…” Story at…
My ct: A number above 50 still represents expansion.
EIA CRUDE INVENTORIES (OilPrice.com)
“The Energy Information Administration reported today
a crude oil inventory draw of 4.9 million barrels for the week to November 29,
after a 1.6-million-barrel increase
reported for the previous week.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.6% to 3113.
-VIX fell about 6% to 14.94.
-The yield on the 10-year Treasury rose to 1.777.
We still have not seen a drop big enough to clear my
statistical warning indicator; it is still calling for a >1% drop in the
S&P 500. It seems unlikely that the pullback has ended.
Still, any pullback should be relatively small – say down
to the 50-dMA (3033), about 2% lower than current values. A drop to the 100-dMA
at 2992 is not out of the question since the 100-dMA is actually on the lower
trend line.
My daily sum of 20 Indicators improved from -7 to
-2 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed sum that negates the daily fluctuations slipped from +22 to +21
(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.
Today was another statistically-significant day; this
time it was an 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. Frequent up-and-down movement
with statistically-significant moves usually indiates a top, though it doesn’t have
to be a major top. I still expect a
relatively small pullback.
I remain bullish in the long-term; short-term we are in
for a bit of a pullback, say in the 3-5% range off the top. As of today, the
S&P 500 is down 1.3% from its recent 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 20
November (RSI was overbought).
(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.
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
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 may wish to have a higher or lower % invested in
stocks depending on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Wednesday, the VIX was bullish; PRICE, SENTIMENT, and
VOLUME Indicators were neutral. Overall, the Long-Term Indicator remained HOLD.
