Tuesday, February 14, 2017
Producer Price Index (PPI) … Small Business Optimism … Valentines Trump … Stock Market Analysis … Trading ETFs and ETF Ranking
“Inflation at the U.S. wholesale level posted the biggest increase in January since 2012, propelled by rising gasoline prices. The Producer Price Index jumped 0.6% in January…core producer prices have climbed 1.6% in the past year, down from a two-year high of 1.8% two months ago.” Story at…
SMALL BUSINESS OPTIMISM (Advisor Perspectives)
“The stunning climb in optimism after the election was significantly improved in December and confirmed in January,” said NFIB President and CEO Juanita Duggan. “Small business owners like what they see so far from Washington.” Details and charts at…
VALENTINES DAY THOUGHTS FROM PRESIDENT TRUMP
“I love this country… I love the Old Days…I love free trade…I love what I’m doing… I love my company…I love building buildings… I love Australia…I love the poorly educated…I love NASCAR…I love your potatoes… I love hoppin’ around… I love the way they twist and turn…I love helping people…I love women”…This could go on for hours. For video see…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 0.4% to 2338.
-VIX fell about 3% to 10.74.
-The yield on the 10-year Treasury rose to 2.472%. (Since the yield is an inverse to price, this means investors were selling Treasuries.)
I listed a litany of bear signs yesterday’s blog. Today we see that 9 out of the last 10 days were up. That’s just another bearish sign. The Market is overextended, but NEVER MIND; stocks appear that they will keep going up forever.
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 IBB, XLU, iEAFE and XLV; currently their 120-dMAs are declining.
Recommended ETF Portfolio:
Financial Select Sector SPDR (XLF)
iShares U.S. Aerospace & Defense (ITA)
iShares Russell 2000 (IWM)
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.
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…
“There are two kinds of forecasters. Those who don’t know, and those who don’t know they don’t know.”- John Kenneth Galbraith.(Hmmmm – perhaps I am #2?)
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched 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
Tuesday, Sentiment was negative. VIX & Volume indicators were neutral. The Price indicator was positive.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONI 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.