JOBLESS CLAIMS (MarketWatch)
"The number of Americans applying for unemployment
benefits fell slightly at the end of February, suggesting the economic damage
from the coronavirus is still in the early stages and hasn’t caused companies
to lay off any workers. Initial jobless claims slipped by 3,000 to 216,000 in
the seven days ended Feb. 29…” Story at…
PRODUCTIVITY (CNBC/AP)
“Productivity grew at a seasonally adjusted annual rate
of 1.2% in the fourth quarter, the Labor Department said.” Story at…
FACTORY ORDERS (Reuters)
“New orders for U.S.-made goods fell more than expected
in January and could drop further as a worldwide coronavirus outbreak strains
supply chains and undercuts the manufacturing sector, which had recently shown
signs of stabilizing after a prolonged slump. Factory goods orders decreased
0.5%...” Story at…
FED EMERGENCY RATE CUTS (MarketWatch)
“Here’s how a brief look at how the markets have
performed in the wake of other surprise cuts by the Fed...”
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%.
Chart and story at…
My cmt: There’s a lot of red on the chart. “Emergency”
rate cuts often signal...duh…emergencies.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 3.3% to 3024.
-VIX rose about 24% to 39.62.
-The yield on the 10-year Treasury slipped to 0.915.
We were hoping for a high up-volume day like Wednesday,
because it would have given a bullish signal.
We didn’t get one. We did see 90% down-volume day, but the close was not
low enough in the day’s range to qualify under the rules for a bearish 90%
down-volume day. That doesn’t mean much now, since we’ve already had two legitimate
90% down-volume days. That’s a bearish sign that is best reversed by a 90% up-volume
day.
My expectation remains that stock markets will retest the
lows. At that time, we’ll have a lot
more information about the market and should be able to make an informed
decision whether to get back in or stay out. That is probably more than a month
away.
The “average” correction has been 12% since 2009. In the
past 15 years or so, corrections greater than 10% have lasted 68 days top to
bottom.
We’re at day 11 and the S&P 500 is now 10.7% from its
all-time top, on 19 Feb. It is 0.9% below its 200-dMA. The close below the
200-day is a bearish sign.
Overall, the daily sum of 20 Indicators slipped
from -10 to -11 (a positive number is bullish; negatives are bearish). The
10-day smoothed sum that negates the daily fluctuations declined from -111
to -115. (These numbers sometimes change after I post the blog based on data
that comes in late.) Most of these indicators are short-term.
While the S&P 500 fell over 3%; Utilities (XLU) fell
about half that much and they were up in after-hours trading. If investors
really believed that the correction was over, they wouldn’t still be buying
Utilities over the S&P 500 Index. This
remains a bearish sign.
No signs of a bottom yet; perhaps at the retest of the prior low.
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 4
March. (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.
MOMENTUM ANALYSIS:
CAUTION: Momentum is not a good tool during market
declines.
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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals slipped
to 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).
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 40% invested in
stocks as of 3 March. (I previously dropped stock allocations to 45% on 27 January).
You may wish to have a higher or lower % invested in stocks depending on your
risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday, the VOLUME and VIX gave bear signals; The
SENTIMENT and PRICE Indicators were neutral. The Long-Term Indicator remained SELL. I suspect that
it is too late to sell now. We are
closer to a bottom than a top.
