Thursday, January 5, 2017

ADP employment … Jobless Claims … ISM Services … Crude Inventories … stock Market Analysis … ETF Ranking

ADP EMPLOYMENT (USA Today)
“Payroll processor ADP said Thursday that businesses added 153,000 jobs in December in a possible sign the government’s employment report this week will also show modest gains.” Story at…
 
JOBLESS CLAIMS (MarketWatch)
“The number of Americans who applied for unemployment benefits after Christmas fell by 28,000 to the second-lowest level of the Obama era, hugging close to a 43-year low…Initial claims sank to 235,000 …” Story at…
 
ISM SERVICES (MArketWatch)
“Service-sector growth remained strong in December, a key survey released Thursday showed. The Institute for Supply Management said its services index stayed at 57.2% in December, matching a 12-month high.” Story at…
 
CRUDE INVENTORIES (Reuters)
“U.S. crude oil inventories fell sharply as higher refining runs prompted a surge in gasoline and distillate stocks in the last week of 2016, the Energy Information Administration said on Thursday…’The large crude draw can entirely be explained away by the 7.1 million-barrel draw to Gulf coast inventories, as tax mitigation strategies meant crude cargoes remained offshore, rather than being brought onshore, where they would be taxed,’ said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky.” Story at…
 
MARKET REPORT / ANALYSIS        
-Thursday the S&P 500 was down about 0.1% to 2269.
-VIX fell about 2% to 11.67.
-The yield on the 10-year Treasury was up slightly to 2.45%.
 
Bear Signs:
-The Top Indicator is still signaling a top as it has since 21 December. (This indicator compares market internals to the S&P 500. The Index is way ahead of its supporting internals.)
-XLI (cyclical industrials ETF) is underperforming the S&P 500 over the last 6-weeks.
-The Index is close to the upper Bollinger Band and the upper and lower bands are getting very close together.
-The S&P 500 is 3% above its 50-dMA. Anything in a range of 3-3.5% above the 50-day is bearish, but this can remain stretched for a while.
-Late day buying/selling is flat to down giving a bearish/neutral indication.
-VIX below 12 is in an area where pullbacks are expected.
 
Bull Signs:
-Money Trend is clearly up.
-The Sum of 16 Indicators is up.
-The %-advancing volume was above 80% on Tuesday and Wednesday and that is generally a bullish sign.
-New-High/New-low data is bullish.
-Advancing volume turned up on a smoothed 10-day basis.
 
Overall, it still looks like a short-term top. The Bollinger Bands are a reliable indicator as is my Topping Indicator.  It’s really a matter of panic buying and that may continue to stretch markets higher.  I expect to see the Index fall 4-5% from its high.
 
I still have short positions in the trading portfolio.
 
Long-term I’m fully invested at 50% in stocks (a conservative-retiree allocation).  The long-term trend remains up.
 
CURRENT RANKING OF 11 ETFs (Ranked Daily)*
#1 RANK for the past 42-days: Financial Select Sector SPDR ETF (XLF).
#2 RANK: iShares Russell 2000 – Small Cap (IWM)
#3 RANK: Energy Select Sector SPDR ETF (XLE)
While the XLF remains ranked #1 using the methodology explained at the link below, IWM is outperforming the others over the past 3-weeks on a percentage gained basis.
*For background on the ETF ranking system see NTSM Page at…
 
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.SOLD 19 Dec Gain: +1.7%
2x Short S&P 500 (SDS): Established 6 Dec.
2x Short S&P 500 (SDS): Established 16 Dec.
Long Volatility ETF (VXX): Established 7 Dec. SOLD 9 Dec. Loss:  -1.2%  
NET: +8.7%
 
THURSDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks advancing (NYSE): 54.6%. (56.6% last trading day.) A number above 50% is usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.6%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Fell from +132 to +89 (percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +122 (It was +194 last trading day.)
-10-day moving average of the change in spread: -5. In other words, over the last 10-days, on average, the spread has decreased by 5 each day.
Market Internals were 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 Volume indicator was neutral. The Price and VIX indicators were positive. The Sentiment indicator was negative.
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.