JOBLESS CLAIMS (MarketWatch)
“The number of Americans who
applied for unemployment benefits fell in early 2020 for the fourth week in a
row, putting new jobless claims back near the lowest level in about 50 years. Initial
jobless claims declined by 9,000 to 214,000 in the seven days ended Jan 4…” Story
at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.7% to 3275.
-VIX dropped about 7% to 12. 54.
-The yield on the 10-year Treasury rose to 1.871.
Today, the S&P 500 closed at a new high. I would have
bailed on my short-position later in the day when it was apparent the close was
going to be a new-record. I say, “I
would have,” because I was on the road and couldn’t make a trade. I’ll close it
tomorrow.
The MACD of S&P 500 price made a bullish crossover;
my MACD of breadth on the NYSE remains bearish.
The S&P 500 is now 9.9% above its 200-dMA. I made a lot of money shorting the Index
whenever it advanced more than 10% above its 200-dMA back before the financial
crash. I may have been a bit too early this time. I’ll wait for 11% above the
200-day and a -4 on the topping indicators. They are presently -2.
My daily sum of 20 Indicators slipped from 0 to -1
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations declined from -21 to -23 (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 remain bullish in the long-term; short-term, it looks
like we are in for a bit of a pullback - but I’m no longer trying to short it. RSI
and Bollinger Bands may need to turn bearish before we see a meaningful dip.
Any pullback should be small: there were a decent number
of new-highs when the S&P 500 made its all-time high recently; 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: -2
Most Recent Day with a value other than Zero: -2 on 8
January (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)
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.
For more details, see NTSM Page at…
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.
