PAYROLL REPORT / AVG HOURLY EARNINGS (YahooFinance)
“The U.S. economy added far more jobs
than expected in November and the joblessness rate edged down
to a 50-year low…
Change
in non-farm payrolls: +266,000…
Average
hourly earnings year over year: +3.1%...” Story at…
UNIV MICHIGAN SENTIMENT (MarketWatch)
“The final reading of the University of Michigan’s U.S.
consumer-sentiment index in November was 96.8, above the October level of
95.5.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.9% to 3146.
-VIX fell about 6% to 13.62.
-The yield on the 10-year Treasury rose to 1.841.
My daily sum of 20 Indicators improved from +2 to
+5 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed sum that negates the daily fluctuations improved from +26 to +37
(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.
Indicators are on the bullish side, but we still have not
seen a drop big enough to clear my statistical warning indicator; it is still
calling for a one-day, >1% drop in the S&P 500. We may have more to the
pullback.
The S&P 500 closed at the upper trend-line on a
statistically significant up-day today. 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. It also sometimes
indicates a top. We’ve also had 7 statistically-significant days in the las 15
trading days. That sort of action also tends to happen at tops.
Sentiment is climbing too, though it is not yet giving a
sell indication.
As I’ve written before, I think any pullback should be
relatively small – say down to the 50-dMA (3033), about 3-5% 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, but it seems like there is a lot
of pent-up buying energy that should prevent a big drop. The S&P 500 is currently down 0.2% from
its recent top
I remain bullish in the long-term; short-term it still
looks like we are in for a bit of a pullback.
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.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
POSITIVE 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
Friday, the VIX was bullish; PRICE, SENTIMENT,
and VOLUME Indicators were neutral. Overall, the Long-Term Indicator remained
HOLD.
