Wednesday, February 8, 2017

Crude Inventories … Stock Market Analysis … ETF Ranking

“U.S. commercial crude inventories rose by 13.8 million barrels in the week through Feb. 3 to 508.6 million. That compared with analysts' expectations for a 2.5 million barrels increase.” Story at…
My cmt: Dennis Gartman said, “We have broken down technically and prices are headed lower.” However, Dennis didn’t mention that there was a reduction in gasoline inventories that may somewhat offset the crude build.
-Wednesday the S&P 500 was up about 0.1% to 2295.
-VIX rose about 1.5% to 11.45.
-The yield on the 10-year Treasury slipped to 2.337%. (Since the yield is an inverse to price, this means investors were buying Treasuries.)
Sentiment remains at extreme levels. (Measured as %-Bulls (Bulls/{bulls+bears}) based on the amounts invested in Rydex/Guggenheim mutual funds.) Sentiment is currently at 81%-bulls (as of Tuesday’s close). This isn’t by itself a great indicator since sentiment can remain elevated for some time, but it’s another reminder that caution is warranted. We’re overdue for a correction. 
The Sum of 16-indicators went from -2 to -4 and the 10-day values are falling too. Bollinger Bands are giving a bearish signal. Money Trend is sharply down today.  Tick data wasn’t available yesterday, but I got yesterday’s value and, with today’s closing Tick of 680, the 10-day value of 505 is a very Bearish number. (300 is the sell point.)
Broken Record Report: As I’ve said for a while, 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 am a Bull.
CURRENT RANKING OF 11 ETFs (Ranked Daily)*
#1 RANK for the past 65-days: Financial Select Sector SPDR ETF (XLF).
Here’s today’s complete result of the ETF Ranking.
I would avoid IBB and XLV; currently their 120-dMAs are declining, but they have been improving recently.
*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.  
Now I wish I had tightened trading rules sooner. I am underwater again!
-“In a bull market, you can only be long or neutral.” – D. Gartman
-“The best policy is to avoid shorting unless a major bear market is underway and downside momentum has been thoroughly established. Even then, your timing must sometimes be perfect. In a bull market the trend is truly your friend, and trading against the grain is usually a fool's errand.” – Clif Droke. Commentary at…
OK, OK. I’ll be more prudent next time.
-10-day moving average of the percentage of stocks advancing (NYSE): 50.8%. (51.6% prior trading-day.) A number above 50% is usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.4%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Improved from -18 to -6 (percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +53 (It was +124 prior trading day.)
-10-day moving average of the change in spread: -27. In other words, over the last 10-days, on average, the spread has decreased by 27 each day.
Market Internals remained Negative 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). 
Wednesday, Sentiment was negative.  VIX & Volume indicators were neutral. The Price indicator was positive.
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.