“Over the weekend we noted that the Washington Post was
caught spreading "fake news" about an alleged attempt by
"Russian hackers" to take over a Vermont Utility (see "Washington
Post Caught Spreading More Fake News About 'Russian Hackers'"). Within
hours of reporting that the "Russian hackers" had gained access to
the electrical grid, the Burlington Electric Department in Vermont had to issue
a statement confirming that the provocative Wapo story simply wasn't true and that a laptop found to be infected
with malware was never actually connected to the grid… …the whole mishap was
derived from an employee's attempt to check his Yahoo email account which, as Wapo reports,
resulted in his computer connecting to a "suspicious IP
address" that is "found elsewhere in the country suggesting
the company wasn't being targeted by Russians."
I don’t read ZeroHedge much since its view of the world
is one-sided, but this story has been reported in many balanced sites,
including the Washington Post’s retraction.
CONSTRUCTION SPENDING (ABC News)
“U.S. builders boosted spending on construction projects
for a second straight month in November, pushing activity to the highest level
in more than a decade.
Construction spending rose 0.9 percent in November after
a 0.6 percent increase in October…” Story at…
ISM INDEX (Investor’s Business Daily)
“The Institute
for Supply Management's manufacturing survey index out Tuesday showed that
the factory sector ended the year on a high note, rising to a two-year high of
54.7 from 53.2 in November.” Story at…
VALUATION UPDATE (Advisor Perspectives)
“We can also use a percentile analysis to put today's
market valuation in the historical context. As the chart below illustrates,
latest P/E10 ratio is approximately at the 96th percentile of this series.”
Chart, additional charts and commentary at…
My cmt: Valuation is stretched, but it can stretch
further so it is not a tradable indicator.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 0.9% to 2258.
-VIX fell about 8% to 12.85.
-The yield on the 10-year Treasury remained 2.45%.
Lance Roberts published 17- Investor Resolutions for
2017. Here are several:
-I will remember that the “Trend Is My Friend.”
-I will expect to be wrong and I will correct errors quickly.
-I will have the patience to allow my discipline and
strategy to work.
-I will turn off the television, put down the newspaper,
and focus on my own analysis.
Others at…
Traders returned to work today, but volume was still about
5% below pre-Holiday numbers. Given the big move in price, that seems like low-volume;
and it may be indicating a lack of conviction by market participants.
Short-term indicators have been improving over the
holiday and are now mostly flat i.e., neutral.
Now only the topping indicators that compare market internals to price remain
bearish; they signaled a top as of 21 December. That may still be the case. Today’s price-action was bearish in the short-term
even as market internals improved.
Tuesday was a statistically significant day and that means
that price-volume exceeded my statistical parameters and, in about 60% of the
time, that leads to a down-day the next day (Wednesday).
Oil prices fell too (about 2%) and that has been a
negative for the markets.
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 40-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)*
2x Short S&P 500 (SDS): Established 6 Dec.
2x Short S&P 500 (SDS): Established 16 Dec.
NET: +8.7%
TUESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 54.3%. (52.4% 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: Rose from -12 to +13 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +134
(It was +45 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 increased by 5
each day.
Market Internals
were neutral on the market. (Advancing volume is still headed down on a 10-day
basis.)
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
Tuesday, 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.
