“The most Americans since June filed for unemployment
benefits last week, reflecting volatility in the data that typically
occurs around the year-end holidays. Jobless claims increased by 17,000 to
268,000 in the week that ended Nov. 26….” Story at….
CONSTRUCTION SPENDING (US News)
“U.S. builders boosted spending on construction projects
by a modest amount in October, helped by big gains in spending on home
construction and the biggest increase in government projects in 10 months. Construction
spending rose 0.5 percent in October…” Story at…
ISM INDEX (Business Insider)
“The Institute of Supply Management and Markit Economics
released their monthly reports on US manufacturing on Thursday. The ISM
purchasing manager's index (PMI) rose to 53.2 in November (52.5 expected.)”
Story at…
AUTO SALES (Milwaukee Wisconsin Journal Sentinel)
“Buoyed by renewed economic confidence following the
presidential election, consumers flocked into domestic automaker
dealerships in November. General Motors and Ford Motor outperformed
expectations, giving their stocks a boost Thursday….Overall U.S. auto sales
increase projections ranged from 2.7% at Edmunds.com to 4.2% at Kelley
Blue Book.” Story at…
My cmt: Auto sales are considered by some to be an
important sentinel for the overall economy.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.4% to 2191 at
the close.
-VIX rose about 6% to 14.07 at the close.
-The yield on the 10-year Treasury rose to 2.44%.
Not much has changed. The market and indicators continue to slowly
deteriorate. Short-term I am a bit more 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. Breadth (10-dMA %-advancing stocks) is moving down.
Advancing volume is falling on a smoothed 10-day basis too. There may be an
opportunity to Short on a very short-term basis. It all depends on the market over the next
couple of days.
I decided to take a position in the Financial Select
Sector SPDR ETF (XLF) this afternoon. It
has held up well even as the broader markets have declined. I can’t say whether
it will go up tomorrow, but over a longer term it appears to be a decent
investment. It remains ranked #1 in my ETF Ranking System.
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)*
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: Financial Select Sector SPDR ETF (XLF).
#2 RANK: iShares U.S. Aerospace & Defense ETF (ITA)
#3 RANK: iShares Russell 2000 – SmallCap (IWM)
The following were considered:
-iShares Russell 2000-SmallCap (IWM);
-iShares Select Dividend (DVY);
-Industrial Select Sector SPDR ETF (XLI);
-Consumer Discret Sel Sect SPDR® ETF (XLY);
-Energy Select Sector SPDR ETF (XLE);
-Financial Select Sector SPDR ETF (XLF);
-iShares Nasdaq Biotechnology ETF (IBB);
-Health Care Select Sector SPDR® ETF (XLV);
-iShares U.S. Aerospace & Defense ETF (ITA);
-Technology Select Sector SPDR ETF (XLK)
-S&P 500 (SPY)
ETF PERFORMANCE (Assumes investing in the highest ranked
ETF and rotating into the highest ranked ETF throughout the year.)
2016: +20% vs S&P 500: +10% thru 30 Nov. with
18-Trades.
2015: -1.7% vs S&P 500: -0.7% with 19-Trades.
2014: +21% vs S&P 500: +11% with 4-Trades.
When I ran the numbers including XLU (Utilities) overall
results were somewhat worse in 2016 and 2014 and better in 2015. XLU was
favored by investors over the DVY for safe haven. The largest holding in DVY is
the utility sector, but DVY is well diversified across all sectors with high
dividend paying companies. DVY return is 14.6% YTD while XLU is 17% YTD.
Utilities are a more defensive holding so it would be the choice during market
turmoil. DVY is currently one of my core
holdings yielding 3.2%.
FOR BACKGROUND ON THE ETF RANKING SYSTEM see NTSM Blog at…http://navigatethestockmarket.blogspot.com/2016/11/gdp-consumer-confidence-ranking.html
THURSDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 52%. (53.5% yesterday.) A number above 50% is usually BULLISH
for the markets short-term.
-150-day moving average of advancing stocks: remained
52.3%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: fell to -5 (percentage calculation
method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +118 (It was +152 yesterday.)
-10-day moving average of the change in spread: +3. In
other words, over the last 10-days, on average, the spread has increased by 3
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).
LONG TERM INDICATOR
Thursday the Sentiment, Volume and VIX indicators were
neutral. The Price indicator was positive. Overall the long-term indicator remained
Neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
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.
