PAYROLL REPORT / AVERAGE HOURLY EARNINGS / UNEMPLOYMENT
RATE (CNBC)
“The U.S. jobs market ended 2019 on a sour note, with
December’s payroll and wage growth missing expectations, according to Labor
Department figures released Friday. Nonfarm payrolls increased by just 145,000
while the unemployment rate held steady at 3.5%...average hourly earnings rose
by just 2.9%...” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 dropped about 0.3% to 3265.
-VIX rose about 0.2% to 12.56.
-The yield on the 10-year Treasury slipped to 1.822.
I covered my short position this morning for a small
loss. The goal of my short was not to protect the portfolio, but rather to
increase returns from my cash account. I
will wait a bit before reestablishing a short position. I may take a bigger next
time around if we see continued “over-exuberance”. We still haven’t seen a
close on the S&P 500 greater than 10% above its 200-dMA. Of course, I may
have covered too soon! We’ll see.
Volume was down today, about 10% below the average for
the month, so there is still not a lot of fear. This market can go higher.
BEAR SIGNS
-My MACD of Breadth remains bearish today.
-The S&P 500 is too far above its 200-dMA when sentiment
is considered. (It is 9.5% above the 200-dMA without sentiment included; the
sell here is 10-11%, so the markets can go higher. Actually, markets can always
go higher than “normal” past pullbacks. The S&P 500 was 14% above its
200-dMA on 26 Jan 2018 at the top before the 20% correction.)
-MACD of S&P 500 price slipped to bearish today. It
has flipped back and forth recently.
-My Money Trend indicator is headed down.
-Cyclical Industrials are underperforming the S&P 500
suggesting investors are worried. In a healthy market, cyclicals would be outperforming.
-Utilities are outperforming the S&P 500. In a healthy
market, utilities should be underperforming.
BULL SIGNS
-Up moves have been bigger than down moves over the last
month.
-52% of stocks on the NYSE have been up over the last 2-weeks.
-New-highs picked up and are now headed up.
-Smart Money (late day action) has been up recently.
-The 5-10-20 Timer is bullish; the 5-dEMA and the 10-dEMA
remain above the 20-dEMA of the S&P 500.
NEUTRAL SIGNS
-Breadth vs the S&P 500 index is now neutral, but the
Index was too far ahead of most stocks on the NYSE and the signal suggests the
top is already in.
-Bollinger Bands.
-RSI.
-The Fosback New-High/New-low Logic index is neutral, but
actually very close to a buy.
-VIX remains n neutral territory.
The percentage of issues making new-highs on the NYSE at
yesterday’s all-time high on the S&P 500 was 8.2%, well above the average
for this stat. This suggests a reasonably broad advance. I disagree with the “experts”
on CNBC who claim this is a narrow advance. It does not appear to me that a
major crash is near.
My daily sum of 20 Indicators improved from -1 to +2
(a positive number is bullish; negatives are bearish) while the 10-day smoothed
sum that negates the daily fluctuations improved from -23 to -20 (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.
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: -1
Most Recent Day with a value other than Zero: -1 on 10
January (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…
FRIDAY 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
Friday, the PRICE indicator was Bullish; VIX,
VOLUME and SENTIMENT Indicators were neutral. Overall, the Long-Term Indicator
remained to HOLD.
