JOBLESS CLAIMS (MarketWatch)
“The number of Americans who applied for unemployment
benefits at the end of 2019 fell slightly, showing the pace of layoffs in the
U.S. remains near a half-century low. Initial jobless claims slipped by 2,000
to 222,000 in the seven days ended Dec. 28…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.8% to 3258.
-VIX dropped about 10% to 12.47.
-The yield on the 10-year Treasury dipped to 1.877.
We had another nice run higher toward the close and once
again the S&P 500 made most of its gain in the last hour. That’s a bullish
sign. Indicators agreed, since they moved to a more bullish stance, too.
My daily sum of 20 Indicators improved from -4 to
-1 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed sum that negates the daily fluctuations declined from +8 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.
Volume returned to “normal”. Today’s Volume was in line
with the average volume over the last month. Still, one suspects many Pros are still
on vacation.
My MACD of Breadth is close to sending a bearish signal. The same is true for the MACD of S&P 500
price.
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 – of course I wrote something similar 2-weeks ago.
I wrote earlier that “…if the market gets further
stretched, I may take a small short position.” Today the S&P 500 reached
9.7% above its 200-dMA. That’s pretty
stretched, but I wasn’t watching and didn’t short the market. Maybe tomorrow,
especially if we see another up-day. As of today, there have only been 5 down-days
on the last 20 – that’s stretched too.
One signal that is no longer bearish: My statistical
analysis of the S&P 500 that gives a “calm-before-the-storm” warning is now
neutral. This had been predicting a 1-2%
single day drop – but no longer.
I remain bullish in the long-term; short-term - it looks
like we are in for a bit of a pullback. End of the month and the first days of
a new month are usually strong due to 401k automatic inflows. It could be a while before the market agrees
with my assessment.
Any pullback should be small (3-5%): there were a decent number
of new-highs when the S&P 500 made its all-time high today; 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: -3
Most Recent Day with a value other than Zero: -3 on 2
January (RSI was overbought; divergence between Breadth and the S&P 500 is
bearish; and the S&P 500 is too far above its 200-dMA when sentiment is considered.
(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)
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
THURSDAY 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
Thursday, the PRICE indicator was Bullish; VIX,
VOLUME and SENTIMENT Indicators were neutral. Overall, the Long-Term Indicator remained
to HOLD. At present, I expect a small pullback so we are looking for a better
buying opportunity.
