Let’s get the February numbers; yesterday I posted
January numbers…
“Orders for U.S. durable goods increased more than
forecast in February, a sign companies are confident about the outlook for the
economy. Bookings for goods meant to last at least three years rose 1.7 percent….”
Story at…
STOCK TRADING ALERT (Safehaven)
“…the broad stock market retraced some of its Tuesday's
decline yesterday, as the S&P 500 index gained 0.2%. Is this just a quick
rebound before another leg down or upward reversal? There have been no
confirmed short-term positive signals so far. We still can see medium-term
overbought conditions along with negative
technical divergences. Therefore, we continue to maintain our
speculative short position.” Paul Rejczak. Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.1% to 2344.
-VIX slipped about 1% to 12.96.
-The yield on the 10-year Treasury was down slightly to
2.413%.
Friday we saw the second test of the recent low of 2344
and today’s test was at the close and that’s a better signal. The Index dropped
to the 50-dMA and bounced up. Volume fell even further and we note that smaller
stocks have been outperforming the S&P 500 recently (and again today). 52.9%
of stocks on the NYSE have been up over the last 10-days. All those are bullish
indications. The market is getting
better behind the scenes. This could be a fake out; in a mini-correction the
signals are highly suspect, but if I saw these numbers after a 20% drop, I’d be
all in.
The reason is that this suggests selling is drying up and
it looks like the most likely move is up. It’s doing this in the face of very
high sentiment. Does it make sense? Not really; one would think the markets
need to correct further (and they may), but the numbers hint otherwise.
In response to the improvements I moved back in at a 50%
in stock position in long-term accounts and pared my short positions slightly.
(I had too much going on to post the move ahead of time.) As I wrote yesterday, I don’t know that the market can breakout significantly
above the old highs, but it might try.
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) & XLE;
currently their 120-dMAs are declining.
The Financials remain number one, but they are losing
momentum and may have topped out. Interest rates are slipping some and that is
bad for the Financials.
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)
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.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals turned
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
Friday, Sentiment was negative (Bullishness is at an
extreme.); Price was positive; Volume & 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, 24 March 2017 in my long-term
accounts.
Remainder is 50% G-Fund (Government securities). This is a conservative retiree
allocation based mostly on low volume at the test of the recent bottom.
