As a proponent of small government, Thomas Jefferson
would lead a revolution.
CONSTRUCTION SPENDING (HousingWire)
“During the first ten months of 2019, U.S. construction spending
amounted to $1.087 trillion, which is 1.7% below last year’s rate of $1.105
trillion, the Census Bureau said. Despite this decline, the
organization reports October’s construction spending was 1.1% above last year’s
rate.” Story at…
ISM MANUFACTURING (MarketWatch)
“The Institute for Supply Management said its manufacturing index sank to 48.1% in November from
48.3% in October…This is the fourth straight sub-50 reading. Readings below 50%
indicate business conditions are getting worse.” Story at…
ISM MANUFACTURING (Advisor Perspectives)
“…the latest reading of 48.1 is its fourth consecutive
month of contraction. What sort of correlation does that have with the months
before the start of recessions? Check out the red dots in the chart above.” –
Jill Mislinsky. Chart from Advisor Perspectives at…
DEMOCRAT IMPEACHMENT STAR WITNESSES USEFUL AS DUST
(MishTalk, Global Economic Trend Analysis)
“Star Witness Testimony -
Jordan: You didn’t listen in on President
Trump & Zelensky’s call?
Taylor: I did not.
Taylor: I did not.
Jordan: You’ve never talked with Chief of Staff Mulvaney?
Taylor: I never did.
Taylor: I never did.
Jordan: You’ve never met the President?
Taylor: That’s correct.
Taylor: That’s correct.
Jordan: And you’re their star witness.”
…The Democrats have managed to turn a grave process into
a dully partisan one says Kimberley Strassel in ‘Impeachment as Usual.’” – Mike Shedlock commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell about 0.9% to 3114.
-VIX rose about 18% to 14.91.
-The yield on the 10-year Treasury rose to 1.822.
We noted Friday that Breadth on the NYSE looks OK. Based
on data thru October, we see that record amounts of cash have been raised by
investors. Incredibly, the cash raised is equal to the cash at the 2009 Financial
Crash bottom. Apparently, investors have been convinced that we will see a severe
recession in 2020 and are preparing for it now; however, this is a contrary
indicator. Record cash amounts suggest that a continued melt up in the stock
market is likely.
Chart and analysis from…
My daily sum of 20 Indicators dropped from +11 to -3
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations slipped from +30 to +28 (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.
As we noted Friday, “I think we could see a dip anytime,
probably starting Monday [today], but I expect that it will be bought so any
pullback should be relatively small – say down to the 50-dMA, about 3-4% lower
than current values.”
Short-term we may be in for a small pullback, though an
up day is suggested for tomorrow; today was statistically-significant. That
just means that the price-volume move exceeded my statistical parameters.
Statistics show that a statistically-significant, down-day is followed by an
up-day about 60% of the time.
I remain bullish in the long-term; we may be in for a bit
of a pullback, say in the 3-5% range.
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.
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals declined
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
Monday, the PRICE indicator was positive; the
SENTIMENT, VIX and VOLUME Indicators were neutral. Overall, the Long-Term
Indicator dropped to HOLD.
