“Americans shopped at a healthy pace in July, buying more
cars, clothes and appliances, evidence that confident consumers are helping
drive robust economic growth. Retail sales rose at a 0.5% annual rate in July…”
Story at…
PRODUCTIVITY (Reuters)
“U.S. worker productivity increased at its fastest pace
in more than three years in the second quarter, depressing labor costs, but the
trend in productivity growth remained moderate. The Labor Department said on
Wednesday nonfarm productivity, which measures hourly output per worker, rose at
a 2.9 percent annualized rate in the April-June quarter.” Story at…
EMPIRE MANUFACTURING (MarketWatch)
“The Empire State manufacturing index rose 3 points to
25.6 in August, to the highest level in ten months, the New York Fed said Wednesday.” Story
at…
INDUSTRIAL PRODUCTION (Reuters)
“U.S. industrial production edged higher in July, boosted
by higher manufacturing output in a positive sign for economic growth. The
Federal Reserve said on Wednesday industrial production rose 0.1 percent last
month after an upwardly revised 1.0 percent increase in June.” Story at…
CRUDE INVENTORIES (OilPrice.com)
“After the American Petroleum Institute surprised markets
yesterday by reporting a build of 3.66 million
barrels for the week ending August 10, the Energy
Information Administration today confirmed a build, but reported that
it had been significantly bigger at 6.8 million barrels.” Story at…
My cmt: Building inventory suggests a lower price for
oil.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 0.8% to 2818.
-VIX rose about 10% to 14.64.
-The yield on the 10-year Treasury slipped to 2.862% as
of this post.
Utilities (XLU-ETF) are up about 7% in the last 2-months
while the S&P 500 is up about 2%. On
the other side, Cyclical Industrials (XLY-ETF) are underperforming the S&P
500. These signals are not healthy for stock investors. They both indicate investors are showing
caution.
Currently, my daily sum of 17 Indicators remained -7 for
the third day in a row (a minus number is bearish) while the 10-day smoothed
version that negates the daily fluctuations fell from -30 to -32. (For a more
detailed look at the indicators look at Friday’s blog post.) The 10-day value
As previously noted, numbers are still negative. Unless
these numbers turn, the most likely scenario remains a decline in the 3-5%
range (from the top). If it happens, that would drop the Index to about 2775.
Wednesday was a statistically-significant, down-day. That
just means that the price-volume move down exceeded statistical parameters that
I track. The stats show that about 60% of the time a statistically significant
move down will be followed by an up-day the next day. This sort of back and
forth action can indicate a top, so this is good news and bad news.
I remain fully invested.
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.
*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 remained
NEGATIVE 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).
I am now 50% invested in stocks. For me, fully invested
is a balanced 50% stock portfolio. As a retiree, this is a position with which
I am comfortable unless I am in full defense mode or feeling especially optimistic.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Wednesday, the Price indicator was positive; Volume, VIX &
Sentiment indicators were neutral. Overall this is a NEUTRAL indication.
