“Some economists are revising up their forecasts for this
week’s February employment report after payroll processor ADP announced
Wednesday that businesses added a booming 298,000 jobs.” Story at…
PRODUCTIVITY (U.S. News)
“The productivity of American workers grew at a slower
pace in fourth quarter and last year recorded the smallest annual gain in five
years. The Labor Department said Wednesday that productivity grew at a 1.3
percent annual pace from October through December...” Story at….
WHOLESALE INVENTORIES (CNBC)
“U.S. wholesale inventories fell slightly more than
previously estimated in January, but inventory investment still was likely to
contribute to economic growth in the first quarter. The Commerce Department said
on Wednesday wholesale inventories decreased 0.2 percent, the biggest drop
since February 2016…”Story at…
CRUDE INVENTORIES (The Globe and Mail)
“Oil prices fell more than 1 per cent on Wednesday after
the U.S. Department of Energy reported a much larger increase than expected in
domestic crude inventories, feeding concerns the supply glut could persist even
as OPEC seeks to prop up prices with output curbs. U.S. crude inventories rose
by 8.2 million barrels in the last week…” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 0.2% to 2363.
-VIX rose about 3% to 11.82.
-The yield on the 10-year Treasury rose to 2.558%. (The
expected rate hikes are taking a toll on bonds.
As prices fall, rates rise.)
SENTIMENT. In addition to bearish issues noted in recent
blog posts, Sentiment has once again reached extreme levels. I measure
Sentiment as %-Bulls (Bulls/{bulls+bears}) based on the amounts invested in
Rydex/Guggenheim mutual funds. Sentiment reached 83%-Bulls for Tuesday at the
close. On a standard deviation basis,
that value matches extremes seen during the dot.com crash. It also reached
similar extreme levels back in May-June 2015 after the Top that preceded a 12%
correction. This isn’t by itself a great indicator since sentiment can remain
elevated for some time, but this is obviously a bearish sign. It is also one of
my long-term indicators since extreme bullish-sentiment can occur before a
routine correction or a major crash. (Sometimes it is simply a warning with no
follow-thru as happened during the FED’s QE Program.) This time I think it is
warning of a correction whose severity is yet unknown. It is not likely a >20%-crash.
My guess is in the 5-6% range, but one can make a good case for either lower or
higher.
The Pros are still selling based on Late-day action that
has been trending down on average over the last month. Once again, we saw that
trend continue today as the S&P 500 shed nearly 6-pts in late-day trading.
The sum of my 16-indicators remained at -6 Tuesday, but
the longer term trend is falling rapidly. Money Trend is pointing down more
sharply today too.
Overall there has been a bearish bent to the data
recently and it has been getting more bearish each day.
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, the number 1 ranked Financials (XLF) outperformed
the S&P 500 by nearly 20%.
*For additional background on the ETF ranking system see
NTSM Page at…
I would avoid iEAFE (Europe and Far East); 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. Technology Select Sector SPDR ETF (XLK)
XLI was slightly ahead of the XLK, but not enough to
change the recommendation. Further, if
there is a correction, XLI is likely to be among the worst performers.
I have not yet established a position based on the ETF
Ranking; I am waiting for a better entry point.
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 Negative on the market and are deteriorating.
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, Price was positive; Sentiment was negative; Volume
& VIX indicators were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I reduced stock allocation to 25% stocks in the
S&P 500 Index fund (C-Fund) Wednesday, 1 March 2017 in my long-term accounts. Remainder is 75% G-Fund
(Government securities). This is a conservative retiree allocation based mostly
on short-term signals.
