EXISTING HOME SALES (MarketWatch)
“Sales of previously-owned homes jumped 3.6% in December,
in spite of the fact that many people are struggling to find homes to because
of the low inventory of properties for sale.” Story at…
FOR HIRE TRUCK TONNAGE (ATA / PR News Wire)
“American Trucking Associations' advanced seasonally
adjusted (SA) For-Hire Truck Tonnage Index decreased 3.5% in November after
falling 0.7% in October…"It's tough to sugar coat November's
reading," said ATA Chief Economist Bob Costello. "It was
the third decrease in the last four months and the index is down 7.2% since
July. Additionally, November was the first month to see a year-over-year drop
in the index since April 2017. While disappointing, it fits with the
expected soft gross domestic product reading expected in the fourth quarter and
reports of a soft fall freight season…Trucking serves as a barometer of the
U.S. economy, representing 70.2% of tonnage carried by all modes of domestic
freight transportation, including manufactured and retail goods. "
Press release at…
https://www.prnewswire.com/news-releases/ata-truck-tonnage-index-fell-3-5-in-november-300978697.html
CHICAGO FED NATIONAL ACTIVITY INDEX (Chicago FED)
“Led by declines in production-related indicators, the
Chicago Fed National Activity Index (CFNAI) fell to –0.35 in December from
+0.41 in November. Three of the four broad categories of indicators that make
up the index decreased from November, and three of the four categories made
negative contributions to the index in December. The index’s three-month moving
average, CFNAI-MA3, moved up to –0.23 in December from –0.31 in November.”
CFNAI report can be downloaded from…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about a point to 3322.
-VIX rose about 0.5% to 12.91.
-The yield on the 10-year Treasury was little changed at
1.773.
My Calm-Before-the-Storm indicator has been warning of a
downturn for several days. This is a
statistical measure of how consistent the market has been – basically, it
tracks a form of volatility. This used to be a decent bearish indicator, but
when the FED was in its the QE mode it was less accurate. At its best, it calls
for a dip too early to be actionable. Now, the FED is putting billions into the
repurchase or “repo” market and that is acting like QE. Still, the indicator has
been getting more bearish recently so it is getting hard to ignore. (It was bearish for most of November and December.) There is a
reduction in the “repo” program in February.
Perhaps we’ll see another “taper-tantrum”.
The daily sum of 20 Indicators slipped from +6 to
+2 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that negates the daily fluctuations improved from +37 to +44 (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.
Bollinger Bands and RSI are both extended, but remain in
Neutral territory.
I remain bullish in the
long-term; short-term, I suspect the S&P 500 can go somewhat higher, but I still expect a pullback reasonably soon. I am waiting for more negative signs from the indicators. One wonders if perhaps we’ll
get to February before we see a dip. February is when the FED will begin
reducing its “repo” operations.
Any pullback should be small (about 5%): the number of
new, 52-week highs has been increasing when the S&P 500 has been making
each new high. Also, the Fosback New-High/New-Low Logic Index remains much closer
to a buy than a sell.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -1
Most Recent Day with a value other than Zero: -1 on 22
January (The S&P 500 is too far above its 200-dMA when sentiment is
considered and Bollinger Bands are overbought.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher is a Buy
Sign.
MOMENTUM ANALYSIS:
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
*For additional background on the ETF ranking system see
NTSM Page at…
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
-Boeing (BA) tested the 304 level today and closed higher
(309). 304 is the low going back to
December of 2018. Still, with a PE of 47, I’d like to see its price fall
further before I’d be tempted.
-Intel (INTC) still looks attractive, but I am waiting
for a dip in the markets before I give it another look. Earnings are due out 23
Jan. INTC has a PE of 14.6 and a Yield
of 2.11%. It may be a decent value play with some of the China trade issues
resolved. It has broken out above its April 2019 prior high.
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 remained
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 PRICE indicator was Bullish; VIX,
VOLUME and SENTIMENT Indicators were neutral. Overall, the Long-Term Indicator remained
HOLD.
