RETAIL SALES (Reuters)
"U.S. retail sales increased less than expected in
November as Americans cut back on discretionary spending despite a strong labor
market, raising fears the economy was slowing a bit faster than anticipated in
the fourth quarter…Retail sales rose 0.2% last month. Data for October was
revised up to show retail sales increasing 0.4%...” Story at…
THE BIG FOUR RECESSION INDICATOR (Advisor Perspectives)
“There is…a general belief that there are four big
indicators that the committee [NBER Business Cycle Dating Committee] weighs
heavily in their [recession] cycle identification process. They are: Nonfarm
Employment; Industrial Production; Real Retail Sales; and Real Personal Income
(excluding Transfer Receipts)… Here is a percent-off-high chart based on an
average of the Big Four.” - Jill
Mislinsky.
More Charts and discussion at…
BUY BUY BUY! (MarketWatch)
“‘Back up the truck and buy, buy, buy.’ That was the
advice from Chris Rupkey, chief financial economist at MUFG Union Bank, who
sent a rousing note to clients late Thursday, on the heels of trade optimism
that is lifting global equities at the week’s end and a decisive election
outcome in the U.K.” Story at…
My cmt: When we consider the Chris Ciovacco analysis I
have posted in prior blogs, there might be something to this “Buy” recommendation…but
then, we have been fully invested since last October.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was little changed at 3169.
-VIX dipped about 9% to 12.63.
-The yield on the 10-year Treasury fell to 1.827.
Today there were 2 Top-Signals: The S&P 500 has
gotten too far ahead of advancing stocks on the NYSE and the S&P 500 is too
far ahead of its Market Internals as measured by my Money Trend indicator. Bollinger
Bands were a whisker from an overbought reading.
I know I sound like a broken record here, but we can
really only report what the numbers show. They are showing an increased likelihood
of a small pullback.
My daily sum of 20 Indicators improved from 0 to +5
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations dropped from +3 to -3 (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 I’ve written before, I think any pullback should be
relatively small – say down to the 50-dMA (3064), about 3-5% lower than current
values. A drop to the 100-dMA at 3004 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 0.4% 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: -2
Most Recent Day with a value other than Zero: -2 on 13
December (Money Trend; Breadth vs S&P 500 both calling for a top).
(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.
AAPL is up 26% since it was ranked #1 in momentum on 2
October.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to 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 PRICE indicator was Bullish; VIX,
SENTIMENT and VOLUME Indicators were neutral. Overall, the Long-Term Indicator
remained HOLD.
