IMPEACHMENT (The Hill)
“The Senate on Wednesday voted to acquit President
Trump on impeachment charges of abuse of power and
obstruction of Congress over his dealings with Ukraine, marking the end of the
months-long saga that has dominated Washington….Sen. Mitt Romney (Utah),
the party's 2012 presidential nominee, announced less than two hours before the
vote that he would vote to convict Trump on the abuse of power
charge, while acquitting him on the second article…no Democratic senators voted
to acquit Trump.” Story at…
ADP EMPLOYMENT CHANGE (YahooFinance)
“Private sector employment increased by 291,000 jobs from
December to January according to the January ADP National Employment Report®.” Story at…
ISM NON-MANUFACTURING (Reuters)
“U.S. services sector activity picked up in January, with
industries reporting increases in new orders, suggesting the economy could
continue to grow moderately this year even as consumer spending is slowing. The
Institute for Supply Management (ISM) said on Wednesday its non-manufacturing
activity index increased to a reading of 55.5 last month…” Story at…
EIA CRUDE INVENTORIES (OilPrice.com)
“Oil prices dipped only slightly after the Energy
Information Administration reported a crude inventory build of 3.4 million barrels
for the last week of January. This compares with an inventory build of
3.5 million barrels for the previous week and analyst expectations of a 3-million-barrel increase for the week
to January 31.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 jumped about 1.1% to 3335.
-VIX dropped about 6% to 15.15.
-The yield on the 10-year Treasury rose to 1.654.
Virus? World-wide pandemic? Chinese manufacturing
shutting down? US auto makers close factories because they can’t get parts? What
me worry?
So, the financial media keeps repeating that the market has
discounted the coronavirus and is cured of its effects. I’m not so sure. WHO
says there is no cure; no treatment; and the disease is projected to kill more
people than the 1918 Spanish Influenza. Here’s a thought. Perhaps the last
three trading days have had nothing to do with news about the coronavirus. Suppose
the bounce is all about the end of the Senate Trial to remove the President,
thus ending three years of shampeachment. (I don't like Trump; but really,
this has been too much.) So, what do indicators say?
Indicators have drastically improved, but they are close
to neutral. Considering where they’ve been, that’s good. I plan to lay out for
another day or two just to see what the market will do. The coronavirus may still
be an issue. I’ll make a decision on Friday or Monday depending on the market
action. I am keeping this in
perspective.
I’ve cut back from 60% invested in stocks to 45% invested
in stocks. All I am doing here is managing risk – if I underperform the market
on this one, I won’t fall on my sword. I’ll be pissed, but not suicidal. (What
happens if one cuts stocks by 15% and stocks go up 10%? Your portfolio would underperform
by 1.5%.)
The daily sum of 20 Indicators improved from -6 to
+1 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that negates the daily fluctuations dropped from -78 to -79. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
Today was a statistically significant up-day. 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.
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 5 February
(The S&P 500 was 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:
During corrections momentum analysis may not be useful.
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.
For more details, see NTSM Page at…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to NEUTRAL / HOLD 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 45% invested in stocks
as of 27 January (down from 60%). This is a conservative 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 VOLUME, VIX, PRICE, and SENTIMENT
Indicators were neutral. Overall, the Long-Term Indicator remained HOLD.
