PRODUCER PRICE INDEX (Bloomberg)
“Wholesale prices in the U.S. rose for the third time in
four months, boosted by increasing fuel costs that are pushing inflation higher
throughout the economy. The producer-price index gained 0.3 percent in December…”
Story at…
Year-over-year inventories increased 1.4%.
RETAIL SALES (WSJ)
“Americans splurged on cars and online shopping during
the holidays, but not much else. Sales at U.S. retailers and restaurants rose 0.6% in
December from a month
earlier…” Story at…
BUSINESS INVENTORIES (MarketWatch)
“Business inventories
in the U.S. climbed 0.7% in November, just as the holiday shopping
season got under way. The monthly rise more than offset a decline in October.”
Story at…
“The key takeaway from the report is that business
inventories continue to remain at an elevated level relative to sales, which
will continue to weigh on pricing power.” From…
MICHIGAN SENTIMENT (Marketwatch)
“The surge in consumer confidence seen since the
presidential election continued in late December, according to a report from
the University of Michigan released Friday. The final December reading on
consumer sentiment rose
to 98.2…” Story at…
CORRECTION COMING (Safehaven)
“…analysis of the recent VIX action is clearly warning of
a potentially massive price volatility increase in the US and global markets.
Many traders use and trade the VIX as a measurement of volatility. The VIX is a
measurement of the expected market volatility over the next 30 days. As the VIX
rises, traders expect larger and more volatile price swings. As the VIX
declines, traders expect smaller and more narrow price swings. Currently, the
VIX is near historical low levels and has recently past a critical cycle
midpoint.” Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.2% to 2275. (For
the 3rd time in 6-days.)
-VIX dropped about 3% to 11.23.
-The yield on the 10-year Treasury rose to 2.399%.
Bear signals:
-The old standby Advance-Decline Ratio remains “overbought”.
-The 10-day closing Tick is high at 287. Closing tick of
300 is considered a sell point per Tom McClellan
-The S&P 500 Index is close to its upper Bollinger
Band a decidedly bearish indication.
-Late day action is down on a 10-day basis.
-My Top Indicator is still calling for a pullback based
on the S&P 500 outperforming the underlying Market Internals.
Bullish indicators:
-Money Trend has been moving up. It estimates dollars into and out of stocks.
-My sum of 16-indicators is now +8 on the day and has
been improving on a 10-day basis too and that’s bullish…but I remain unconvinced
because my short-term indicators are still pointing down.
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.
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)*
#1 RANK for the past 48-days: Financial Select Sector
SPDR ETF (XLF).
#2 RANK: iShares Russell 2000 – Small Cap (IWM)
#3 RANK: iShares U.S. Aerospace and Defense ETF (ITA)
*For background on the ETF ranking system see NTSM Page
at…
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): 56.9%. (55.6% prior trading-day.) A number above 50% is usually
BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.7%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Dropped from +26 to +51
(percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +124
(It was +62 prior trading day.)
-10-day moving average of the change in spread: +9. In
other words, over the last 10-days, on average, the spread has increased by 9
each day.
Market Internals were
positive 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 VIX & Volume indicators were neutral. The
Price indicator was positive. The Sentiment indicator was 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.
