PAYROLL REPORT / AVG HOURLY EARNINGS (CNBC)
“-Nonfarm payrolls surged 225,000 for the month, well
above Wall Street estimates for a 158,000 gain.
-The unemployment rate ticked higher to 3.6%, but for the
right reason as the labor force participation rate increased 0.2 percentage
points to 63.4%, matching its highest level since June 2013.
-Average hourly earnings rose 3.1% over a year ago to
$28.44, ahead of estimates for 3% growth.” Story at…
CHINESE “EARLY WARNING” VIRUS DOCTOR DIES (WSJ)
“A Chinese doctor who became a folk hero after he was
arrested for warning about the dangers of the deadly new virus now spreading
around the world died on Friday after becoming infected with it. Li Wenliang, a 33-year-old ophthalmologist
based in Wuhan, the epicenter of the outbreak, had captivated the country and
triggered an extraordinary outpouring of emotion as he ailed…Dr. Li, who was
married with one child and another on the way, caught the dangerous new virus
before Chinese authorities had stepped up its warnings about it. In the early
days, he recalled, he didn’t wear any protective gear.” Story at…
My cmt: He was 33 years old. He quarantined himself and
sought medical attention immediately. This thing may be more dangerous than is
understood by most.
DR. OF ECON ABOUT THE CORONAVIRUS (WSJ)
“Figuring out what the economic impact of the coronavirus
outbreak will be is…Potentially futile because nobody knows what the eventual
extent of the outbreak will be…estimates of the outbreak’s economic impact vary
greatly. J.P. Morgan economists
initially estimated it would reduce annualized global gross domestic product
growth by 0.3 percentage points in the first quarter, but now reckon the effect
will be larger. UBS economists
expect it will knock 2.5 percentage points off global growth.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 dipped about 0.5% to 3328.
-VIX rose about 3% to 15.47.
-The yield on the 10-year Treasury slipped to 1.584.
It’s Friday so let’s do a run-down of Bull/Bear signs:
BEAR SIGNS
-The S&P 500 failed to hold yesterday’s new-high and closed
below the prior new-high of 3330 made on 17 January.
-Up moves have been smaller than down moves over the last
month.
-Cyclical Industrials are underperforming the S&P 500
and Utilities are outperforming the Index, both suggesting investors are worried.
-The S&P 500 is too far above its 200-dMA when
sentiment is considered
NEUTRAL
-Breadth vs the S&P 500 index is leaning to the bear
side as it indicates that the Index is too far ahead of most stocks on the
NYSE. It is not giving a bear signal yet.
-New-high/new-low data dipped, but then stalled as the
S&P 500 rocketed higher after the Trump Impeachment ended. This one is
leaning bearish, but it remains in neutral territory until it begins falling
again.
-RSI is in the mid-zone, solidly neutral.
-Bollinger Bands are elevated, close to a bearish signal,
but remain neutral.
-Statistically, the S&P 500 was too calm (measured by
daily moves) until about 2-weeks ago. Now it is neutral.
-Sentiment is extremely elevated, but it is not giving a
sell signal.
-VIX has been bouncing up and down.
-Money Trend is mixed, an indication that internals can’t
seem to make up their collective mind.
-The S&P 500 was way ahead of its advance-decline
stat in December and early January, but improved some and has been stalled in
neutral territory, but leaning strongly to the
bear-side.
-The short-term Fosback High-Low Logic Index is neutral.
-Overbought/Oversold Index, a measure of advance-decline
data, was overbought at the high on17 January, but not now.
BULL SIGNS
-MACD of S&P 500 price just made a bullish crossover today,
Friday.
-MACD of S&P 500 stocks advancing on the NYSE made a
bullish crossover Thursday.
-The 5-10-20 Timer is BUY as of Tuesday, because the
5-dEMA and the 10-dEMA are above the 20-dEMA.
I think the biggest issue is that the S&P 500 failed
to hold its new-high from yesterday and, more importantly, closed below the prior
new-high of 3329 made on 17 January. This is a cause for concern for the bulls
since it suggests that the big rally this week may have been caused by the end
of the Trump impeachment. We may still
have issues with the 2019 new coronavirus and an overstretched stock market.
Overall, the sum of 20 Indicators were mixed.
The daily sum of 20 Indicators declined from +5 to
+1 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that negates the daily fluctuations improved from -74 to -68. (These
numbers sometimes change after I post the blog based on data that comes in late.)
Most of these indicators are short-term.
The S&P 500 needs to climb above its prior high of
3330 and hold there for at least two consecutive closes before I will consider increasing
stock holdings.
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 7
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:
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.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
POSITIVE / BULLISH 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
Friday, the VOLUME, VIX, PRICE, and SENTIMENT Indicators
were neutral. The Long-Term
Indicator is HOLD. (The 5-10-20 Timer signal is a one-day signal; that’s
why we had a buy yesterday.)
