JOBLESS CLAIMS / DEEP RECESSION (MarketWatch)
“… Americans who applied for unemployment benefits last
week soared by a record 6.6 million, bringing the increase in new jobless
claims in the last two weeks of March to 10 million…“We forecast the cumulative
decline in GDP to be 10.4% and this will be the deepest recession on record,
nearly five times more severe than the post-war average,” the analysts wrote.”
Story at…
FACTORY ORDERS (Reuters)
“The Institute for Supply Management (ISM) reported on
Wednesday that its index of national factory activity fell to a reading of 49.1
in March from 50.1 in February. A reading below 50 indicates contraction in the
manufacturing sector, which accounts for 11% of the U.S. economy.” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 2.3% to 2527.
-VIX dropped about 11% to 50.091.
-The yield on the 10-year
Treasury rose to 0.595.
The Index is currently down 25.4% from its all-time high.
Overall, the daily sum of 20 Indicators declined
from +4 to +2 (a positive number is bullish; negatives are bearish). The 10-day
smoothed sum that negates the daily fluctuations improved from +11 to +20.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
It is still possible that we have seen the low or close
to it. Now, I think we will have a retest of that low. I will wait for a successful
retest before adding further to stock holdings.
The worry is that this market could play out like 2008-2009.
After the markets made a significant bottom, they rallied, but then fell around
30% more before bottoming 2-months later.
RECENT STOCK PURCHASES
-SSO. SOLD
-Biotech ETF (IBB). #1 in momentum. We’re in a health
crisis so perhaps this will be a good longer-term hold too.
-Apple. SOLD
-XLK. Technology ETF spreads some risk and gives exposure
to Microsoft, Cisco, etc.; was #1 in momentum before the crisis.
-Starbucks. SOLD
I took small losses on the stock trades. Wish I had sold
a few days ago!
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: +6**
Most Recent Day with a value other than Zero: +6 on 2 April.
(The S&P 500 is too far below its 200-dMA when sentiment is considered;
Non-Crash Sentiment is bullish; Breadth has made a bullish divergence from the
S&P 500; Money Trend has turned bullish; the Fosback New-hi/new-low Logic Indicator
is bullish; and Smart Money {late-day-action} is oversold.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher is a Buy
Sign.
**The Top/Bottom indicator continues to give
extreme oversold readings, but as I have been saying, we won’t know when we
have a bottom until we have a successful retest, or a reversal buy-signal from
Breadth or Volume…Well, we had the bullish Breadth AND Volume reversal signals,
but nothing is ever certain, is it?
MOMENTUM ANALYSIS:
IBB has the highest negative momentum; IBB (iShares
Nasdaq Biotechnology ETF) is the best of the
bad. IBB is down “only” 9% in the last
40-days; XLE is down 50%.
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
The top ranked ETF receives 100%; in this case, -100%
because the market has been so bad. The rest are then ranked based on their
momentum relative to the leading ETF. The
highest ranked are those closest to zero. 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%, rather minus 100%
since the market has been bad. The rest are then ranked based on their momentum
relative to the leading stock. The highest ranked are those closest to zero.
For more details, see NTSM Page at…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals declined
to 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 35% invested in
stocks. You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday, the New-High/New-Low, VOLUME, and NON-CRASH
SENTIMENT indicators are bullish; the VIX indicator is still giving a bear
signal; the PRICE indicator is neutral.
The Long-Term Indicator remained HOLD. I sold some stocks
1 April. If we do retrace down, I’ll try to find a good buy-point. At that time, I’ll increase stock holdings
significantly.
