“The Energy Information Administration rattled oil bulls
by reporting a
build of 1.9 million barrels in U.S. crude oil inventories for the week to
February 2…The inventory report by the EIA is once again in conflict with figures from
the American Petroleum Institute, which surprised analysts with a
1.05-million-barrel decline…” [yesterday] Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dropped about 0.5% to 2682.
-VIX dropped about 8% to 27.73.
-The yield on the 10-year Treasury is a high 2.81%.
A FEW BULLISH SIGNS ARE SHOWING UP
-New-High new-low data improved a lot by some methods of
measurement; not so much by other ways of looking at the same data.
-Up-volume improved somewhat; but over the last 2-weeks
only 39% of volume has been up-volume so it’s not overly bullish.
-The Overbought/Oversold Ratio (aka the Advance-Decline
Ratio) remains oversold. (This one isn’t the most reliable measure.)
MOST SIGNS REMAIN BEARISH
-Sentiment was slightly up again on Tuesday (data won’t
be available until later tonight) so I continue think a bounce at these levels
is likely to fail. The stock market
doesn’t usually, hold its value with Sentiment levels in line with those
extremes seen during the dot.com era. I
remain surprised that traders in the Rydex/Guggenheim mutual funds remain so
bullish – that is a bearish indication.
- The 5-10-20 Timer is still signaling “sell” today. The
5-dEMA and the 10-dEMA have dropped below the 20-dEMA for the S&P 500
Index. This is a decent, simple timing system.
- My sum of 17 Indicators improved from -12 to -10 today.
(A “-” number means that most indicators are bearish.) On a Longer term,
smoothed basis to avoid the daily fluctuations, the sum of indicators remains sharply
bearish.
We’ll have a better idea of what is going on if the
S&P 500 slips below the recent low of 2649. For now, all we really know for
sure is that market trends over the last 3-weeks have been down.
I am bearish short-term. We got the expected bounce
Tuesday, but I don’t expect the overall trend to turn positive. I think there is more downside ahead after
the bounce concludes; it might be over already – we don’t know.
Longer term, my long-term indicator remained negative,
but since I have already dropped stock holdings to 40% I am not planning to
make further changes now. If the market recovers while Indicators remain
negative, I’ll be a seller again. (The longer-term indicator is probably not as
long-term as we might like. It is suggesting trouble that might turn into a bear market, but I'd say it's not too likely. We’d need to
see the 150-dMA in Breadth (%-advancing stocks on the NYSE) fall below 50% before
I’d be concerned that a crash is in the works. Another high volume day would be
a worry too. For now, I don’t think we are facing a full-blown bear market.
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
In corrections
this chart may be less valuable – all stocks are falling.
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)
In corrections
this chart may be less valuable – all stocks are falling.
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
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).
LONG TERM INDICATOR
Wednesday, Sentiment, Volume and VIX Indicators were negative; Price
remained neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I shifted to a
conservative 40% invested in stocks and 60% in cash on 31 Jan. For the TSP,
that would be 40% in the S&P 500 Index fund (C-Fund) with the remainder 60%
G-Fund (Government securities) on 31 Jan.
