CNBC described it as “…a dark, populist message that
surprised investors and left conservatives unsure exactly what they would get
from the new White House.” Article and speech at…
My cmt: Trump’s inauguration speech was widely seen as a
negative diatribe of issues facing the country - one would have thought the
U.S. was in disarray. Further, it was
little more than a collection of political platitudes where he said he was
going to fix everything. The markets were up, but declined during the speech
and didn’t fully recover. So it looks like the markets will have to wait and
see; or stated another way, it’s more of the same for the stock market.
CASS FREIGHT INDEX (CASS Information Systems)
Shipments were up 3.5% year-over-year, but expenditures
were down 3% (year-over-year). The report stated, “Expenditures (or the total amount spent on
freight) were still down (-3.0% on a YoY basis), but as was true in October and
November, this was less than the rates of contraction in May, June, July and
August; down 10.1%, 8.8%, 5.1% and 6.3% respectively…Data is beginning to
suggest that the consumer is finally starting to spend a little and that with
the recent surge in the price of crude, the industrial economy’s rate of
deceleration has eased.” - December CASS Freight Index. Available at…
2017 – or 1937? (Financial Sense)
“As a result of some Fed actions taken in 1936 and 1937,
the US economy, after experiencing a robust economic recovery starting in early
1934, slipped back into a recession midyear 1937, which lasted through midyear
1938….The Fed’s actions of 1936-37 caused a sharp slowdown in the growth of
thin-air credit, which resulted in the recession of 1937-38. It is too early
for me to forecast a recession in 2017 because of the Fed’s disregard for the
recent growth slowdown in thin-air credit. But I do believe investor
expectations of US economic growth will be disappointed in the first half of
2017…this economic growth disappointment has positive implications for US
investment grade bonds and negative implications for risk assets such as US
equities.” – Paul Kasriel. Commentary at…
TOPPING OR CONSOLIDATION – 19 Jan 2017 (Safehaven)
“Briefly: In our opinion, speculative short
positions are favored (with stop-loss at 2,330, and profit target at 2,150,
S&P 500 index). Our intraday outlook remains bearish, and our short-term
outlook is bearish. Our medium-term outlook remains neutral, following S&P
500 index breakout above last year's all-time high…” – Paul Rejczak
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.3% to 2271.
-VIX rose about 2.5% to 12.77.
-The yield on the 10-year Treasury slipped slightly to
2.468%.
Once again the S&P 500 is very near its all-time
high. On a short-term basis I think the
market is ripe for a pullback. My guess
would be about a 5% drop from here, but it could drop further. The market is
stretched and may continue to stretch higher, but overall, I think the upside
potential is limited while the downside risk is fairly high, at least for a
short-term pullback. I remain a short-term bear.
WHAT THE SHORT-TERM, TEA LEAVES SAY…
Neutral Signals
-Late day action is down on a 10-day percentage basis
(bearish), but it depends how one measures this – If one just counts up days vs
down days, it’s up. Overall I’ll give this indicator a neutral rating.
-The cyclical industrial stocks (XLI-ETF) slipped a
little into neutral.
Bear signals:
-The Money Trend indicator remains sharply down and
bearish. Money Trend makes a rough estimate of dollars in and out of
stocks.
-The 10-day closing Tick is high at 245. Closing tick of
300 is considered a sell point per Tom McClellan and it was over 300 Tuesday
and Wednesday of this week.
-The S&P 500 Index remains close to its upper
Bollinger Band a decidedly bearish indication. Bollinger Bands are close
together also, another Bearish indication.
-My Top Indicator is still at a level that is calling for
a pullback based on the S&P 500 outperforming the underlying Market
Internals.
-My sum of 16-indicators is now -2 on the day, up from -4
yesterday, but it is bearish on a 10-day basis that smoothes the daily
fluctuations.
-The Calm-Before-the Storm indicator (based on
statistical analysis of market movement) is calling for a selloff. (This
indicator is similar to Bollinger Bands.)
Bullish indicators:
None of the indicators I track for short-term trading are
bullish.
LONG TERM
Long-term, I’m fully invested at 50% in stocks (a
conservative-retiree allocation – I don’t do short-term timing with retirement
money).
CURRENT RANKING OF 11 ETFs (Ranked Daily)* - #2 & #3
Changed -
#1 RANK for the past 51-days: Financial Select Sector
SPDR ETF (XLF).
#2 RANK: Industrial Select Sector SPDR ETF (XLI)
#3 RANK: iShares U.S. Aerospace & Defense ETF (ITA)
*For background on the ETF ranking system see NTSM Page
at…
Here’s today’s complete result of the ETF Ranking.
Note: The variance of the data series used for ranking is
not very high now so there may be frequent changes in the rankings of the 2nd
and 3rd positions. XLF remains way out in front of the other sectors
analyzed. Variance is low when there is
confusion in the market and it may be another topping indicator, since
investors can’t seem to decide on the leaders.
TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
Rydex 2x Short S&P 500 (RYTPX): Established 6 Dec.
2x Short S&P 500 (SDS): Established 16 Dec.
Long Volatility ETN (VXX): Established 6 Jan 2017.
NET:
FRIDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 50.7%. (48.8% prior trading-day.) A number above 50% is
usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.8%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Rose from -68 to -25 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +72
(It was +56 prior 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 improved
to 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
Friday, the Sentiment, VIX & Volume indicators were
neutral. The Price indicator was positive.
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.
