Friday, December 2, 2016

Nonfarm Payrolls … Hourly earnings … PE10 … Stock Market Analysis … ETF Daily Ranking

“U.S. employers boosted hiring in November and the unemployment rate dropped to a more than nine-year low of 4.6 percent, making it almost certain that the Federal Reserve will raise interest rates later this month. Nonfarm payrolls increased by 178,000 jobs last month…” Story at… 
“November average hourly earnings were down 0.1% ( consensus +0.2%) after being up 0.4% in October.  Over the last 12 months, average hourly earnings have risen 2.5% versus 2.8% for the 12-month period ending in October.” Details and charts  at…
The following chart shows the PE 10 and its deviation from its mean (average). We’re now in the 4th highest deviation in history and it won’t take much for the markets to take over 3rd place. Still, valuation can go higher so this isn’t necessarily a market killer in the long run. 
For additional charts and commentary see Advisor Perspectives at…
-Friday the S&P 500 was up a point to 2192 at the close.
-VIX rose about 0.4% to 14.12 at the close.
-The yield on the 10-year Treasury slipped to 2.39%.
Updating yesterday’s note:
Not much has changed.  Some indicators continue to slowly deteriorate; others improved slightly. Short-term I am somewhat bearish. My Money Trend indicator and the Sum of 16-Indicators are pointing down. New-High/New-Low data is now giving a bearish indication, but on the bullish side, Breadth (10-dMA %-advancing stocks) picked up a bit. Advancing volume turned up on a smoothed 10-day basis too.
I was close to going short this afternoon, but with a couple of green shoots I didn’t. There still may be an opportunity to Short soon (for a short-term trade).  It all depends on the market over the next couple of days.
Long-term I’m fully invested at 50% in stocks (a conservative-retiree allocation) – I remain “hold-my-nose” bullish.  The long-term trend remains up.
TRADING PORTFOLIO (Small-% of the total portfolio)*
Long Volatility ETF (VXX): Established 5 Aug. SOLD 15 Sep. Gain: +6.6%.
2x S&P 500 ETF (SSO): Established 22 Sep. SOLD 7 Oct. Loss: -1.5%.
2x Short S&P 500 (SDS): Established 7 Oct. SOLD 10 Oct. Loss: -1.4%.
2x Short Dow 30 (SDOW): Established 17 Oct. SOLD 18 Oct Loss: -0.4%
2x Dow ETF (DDM) Established 18 Oct. SOLD 21 Oct Loss: -0.9
2x S&P 500 ETF (SSO) Established 9 Nov. SOLD 10 Nov Gain: +3.5%
2x S&P 500 ETF (SSO) Established 15 Nov. SOLD 22 Nov. Gain: +2.3%
Financial Select Sector SPDR ETF (XLF) Est. 1 Dec.
   NET: +8.2%
*I am not really happy doing this much trading, but I need to rebuild the trading balance after holding my shorts too long after the February correction.  (I really should follow my own indicators. My system is smarter than I am!)
CURRENT RANKING OF 11 ETFs (Ranked Daily)*
#1 RANK for the past 19-days: Financial Select Sector SPDR ETF (XLF).
#2 RANK: iShares U.S. Aerospace & Defense ETF (ITA)
#3 RANK: Energy Select Sector SPDR ETF (XLE)
*For background on the ETF ranking system see NTSM Page at…
-10-day moving average of the percentage of stocks advancing (NYSE): 52.3%. (52% yesterday.) A number above 50% is usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: remained 52.2%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: rose from -5 to +3; that’s nit much change (percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +21 (It was +118 yesterday.)
-10-day moving average of the change in spread: -13. In other words, over the last 10-days, on average, the spread has decreased by 13 each day.
Market Internals remained 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). 
Friday the Sentiment, Volume and VIX indicators were neutral. The Price indicator was positive. Overall the long-term indicator remained Neutral.
I increased stock allocation to 50% stocks in the S&P 500 Index fund (C-Fund) Friday, 23 Sep 2016 in my long-term accounts. Remainder is 50% G-Fund. This is a conservative retiree allocation.