“Sales of previously-owned homes hurtled to the highest
in a decade in January, a sign of durable demand in the face of higher mortgage
rates and leaner supply. Existing-home sales ran…3.8% higher than a year ago.”
Story at…
FOMC MINUTES (Bloomberg)
“Federal Reserve officials expressed confidence they can
raise interest rates gradually, while a hike “fairly soon” might be appropriate
to avoid the risk of an overheated economy, minutes of Federal Open Market
Committee’s latest meeting showed. “Many participants expressed the view that
it might be appropriate to raise the federal funds rate again fairly soon if
incoming information on the labor market and inflation was in line with or
stronger than their current expectations…” Story at…
JEFFREY SAUT COMMENTARY (Raymond James)
“…the longest dated VIX futures contract (October 2017)
traded below 17 recently. This is a fairly rare event and tends to be associated
with “trading tops.” Furthermore, this type of recent panic buying is strongly
correlated with the kind of buying you see toward the end of a trend and not
the beginning of a new upside trend.” - Jeffrey Saut. Full commentary at…
THE BIG FOUR ECONOMIC INDICATORS (Advisor Perspectives)
“There is…a general belief that there are four big
indicators that the committee [NBER Business Cycle Dating Committee] weighs
heavily in their cycle identification process [in identifying recessions]. They
are: Nonfarm Employment; Industrial Production; Real Retail Sales; and Real
Personal Income….
…The US economy has been slow in recovering from the
Great Recession, and the overall picture has been a mixed bag for well over a
year and counting. Employment and Income have been relatively strong. Real
Retail Sales have been rising but below trend. Industrial Production has
essentially been in a recession.”
Additional Charts, analysis and commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 0.1% to 2363.
-VIX rose about 1.5% to 11.74.
-The yield on the 10-year Treasury slipped to 2.413%.
The S&P 500 dropped sharply after the release of the
FED minutes from their last meeting. It recovered shortly afterward and remained
on a bullish up-trend to finish the day. The closing tick was again strong at
684. The 10-day average of Closing Tick remains at an extreme high 569. A
number above 300 is a bearish sign.
RSI and the old Advance-Decline Ratio remain
oversold. Bollinger Bands are not oversold,
but they are fairly high giving them a bearish leaning.
The Sum of 16-Indicators is somewhat bullish at +5,
unchanged from yesterday. None of the
bullish indicators are very strong, so not much has changed.
I keep saying this, but the Market is overextended, but
NEVER MIND; stocks appear that they will keep going up forever. EVERYONE IS
BULLISH.
CURRENT RANKING OF 15 ETFs (Ranked Daily)
The top ranked ETF receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF. While momentum isn’t stock performance per
se, momentum is closely related to stock performance. For example, over the
4-months from Oct thru mid-February 2016, Financials (XLF) have outperformed
the S&P 500 by nearly 20%.
*For additional background on the ETF ranking system see
NTSM Page at…
I would avoid iEAFE; currently its 120-dMA is declining.
Recommended ETF Portfolio of top 3:
1. Financial Select Sector SPDR (XLF)
2. iShares U.S. Aerospace & Defense (ITA)
3. iShares Russell 2000 (IWM)
Industrial Select Sector SPDR ETF (XLI) slipped into 4th
so no need to change the top 3.
Also, the Technology Select Sector SPDR ETF (XLK) is
close to the others.
I have not yet established a position based on the ETF
Ranking; I am waiting for a better entry point. Neither IWM nor XLI will
perform well in a pullback.
SHORT-TERM 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:
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.
“There are two kinds of forecasters. Those who
don’t know, and those who don’t know they don’t know.”- John Kenneth Galbraith.
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
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
Wednesday, Volume & Price were positive; Sentiment
& VIX indicators were 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.
