SMALL BUSINESS OPTIMISM (MornighStar)
“Small-business owners' confidence in the U.S. economy
rose in November, its largest month-over-month gain since May 2018, as owners
continued to invest, hire and increase wages, according to the National
Federation of Independent Business.” Story at…
PRODUCTIVITY (CNBC)
““Nonfarm
productivity, which measures hourly output per worker, fell at a 0.2% rate in
the last quarter, the biggest drop since the fourth quarter of 2015, the Labor
Department said…Compared to the third quarter of 2018, labor costs grew at a
2.2% rate, rather than the previously estimated 3.1%” Story at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 0.3% to 3133.
-VIX dipped about 1% to 15.72.
-The yield on the 10-year Treasury rose to 1.842.
I’m beginning to sound like a broken record, but not much
has changed.
My daily sum of 20 Indicators dropped from +1 to -2
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations dropped from +41 to +29 (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.
I’ve been making this comment for a while: 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.
Sentiment has been climbing too, though it has leveled
off. 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 (3049), about 3-5% lower than current
values. A drop to the 100-dMA at 2999 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 0.7% 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.
TUESDAY 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 may wish to have a higher or lower % invested in
stocks depending on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the PRICE indicator was Bullish; VIX, SENTIMENT
and VOLUME Indicators were neutral. Overall, the Long-Term Indicator remained
HOLD.
