RETAIL SALES (MarketWatch)
“Every major group except auto dealers and department
stores reported stronger sales. If auto receipts are set aside, retail sales
rose a robust 0.7% in the final month of 2019. For the full year, retail sales
climbed a healthy 5.8%, slightly above the average for the past 30 years.”
Story at…
PHILADELPHIA FED INDEX (MarketWatch)
“The Philadelphia Fed said Thursday its gauge of business
activity in its region surged in January. The regional Fed bank’s index rose to
17 in January from 2.4 in the prior month. That’s the highest reading in eight
months.” Story at…
JOBLESS CLAIMS (MarketWatch)
“The number of Americans filing for unemployment benefits
fell more than expected last week, pointing to sustained labor market strength
despite a recent slowdown in job growth. Initial claims for state unemployment
benefits dropped 10,000 to a seasonally adjusted 204,000 for the week ended
Jan. 11…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.8% to 3317.
-VIX dipped about 0.8% to 12.32.
-The yield on the 10-year Treasury rose to1.832.
We still see a good number of positive indicators, even
though the daily sum of 20 Indicators declined from +8 to +7 (a positive
number is bullish; negatives are bearish). The 10-day smoothed sum that negates
the daily fluctuations improved from +10 to +18 (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.
…However, cracks are still showing. Bollinger Bands are overbought as is the
Overbought/Oversold Index, a measure of advance-decline data. The Calm-Before-the-Storm
indicator continues to warn that the stock market is too calm. A 1-2%, one-day
drop is expected when the market breaks. Usually, that happens within a month
of the signal. Today the S&P 500 closed 10.9% above its 200-dMA. The 10-15%
zone is where we usually see a pullback and often at the lower end of that
range.
I remain bullish in the long-term;
short-term, I‘ve been expecting a pullback, but it has been slow to develop. 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 (3-5%): the number of new, 52-week highs
has been increasing when the S&P 500 has been making each new high, today
included. 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: -2
Most Recent Day with a value other than Zero: -2 on 16
January (The S&P 500 is too far above its 200-dMA when sentiment is
considered and Bollinger Bands are now 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)
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
Positive 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.
