“Personal spending missed, but personal income beat. For
the month of January, personal income rose by 0.4% and personal spending came
in at 0.2%.” Story at…
PCE PRICES (KFGO)
“…the largest
monthly increase in inflation in four years eroded households' purchasing
power, pointing to moderate economic growth in the first quarter… In January
the personal consumption expenditures (PCE) price index increased 0.4 percent -
the largest gain since February 2013 - after rising 0.2 percent in December.”
Story at…
My cmt: The FED pays attention to this one as one of its
primary measures of inflation.
CONSTRUCTION SPENDING (MarketWatch)
“Construction spending tumbled 1% in January, led by
declines in transportation, roads and educational buildings.” Story at…
ISM INDEX (Investor Business Daily)
“The Institute for Supply Management's manufacturing
survey index out Wednesday rose to 57.7 in February as factory
activity accelerated for the sixth straight month. That's the best reading
since August 2014, giving the Federal Reserve more reasons to raise rates
this month.” Story at…
CRUDE INVENTORIES (24/7 Wall St.)
“The U.S. Energy Information Administration (EIA)
released its weekly petroleum status report Wednesday morning. U.S. commercial
crude inventories increased by 1.5 million barrels last week, maintaining a
total U.S. commercial crude inventory of 520.2 million barrels, the highest
level since the EIA began keeping records in 1982.” Story at…
FED BEIGE BOOK (MarketWatch)
“The spike in business optimism in the wake of the
presidential election has cooled a bit, a report released Wednesday showed. The
Federal Reserve’s so-called Beige Book, a collection of anecdotes about the economy gathered before the central bank makes
interest-rate decisions, said ‘businesses were generally optimistic about the
near term but to a somewhat lesser degree than in the prior report.’” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 1.4% to 2396.
-VIX dropped about 4% to 12.46 near the close.
-The yield on the 10-year Treasury rose to 2.456%. (The
Bond Ghouls were selling.)
Yoouuuuge day up today. Believe me. It was bigly. We’re
going to build a wall under this market so it never goes down.
The sum of 16-indicators was zero today. That’s weak for
a big day and the longer trend remains down. Money Trend is still pointing
down. (That surprises me given the day-after-day climb we’ve seen recently.) Late-day
action is trending down on average over the last month, and there was late day
selling today.
Volume picked up and was nearly 20% over the monthly
norm; it was up so it’s not like there was any confirmation of a downtrend. If
anything it’s a sign of too much bullishness.
My earlier post Wednesday noted a couple of other
negative signs. Today had the look of a
blow-off top. Will it be? The way the
market has powered thru negatives recently, who knows, but I took some money off the table.
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 and SCHE (emerging markets);
currently their 120-dMAs are 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. Neither IWM nor XLI will
perform well in a pullback so I’ll wait to move them up in the ranking if they
do in fact deserve it later on.
Energy (XLE) has slipped all the way to 14th
place. If Energy continues to slide the S&P 500 is likely to follow.
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 improved
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
Wednesday, Price was negative; Sentiment 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.
