“More Americans applied for unemployment benefits last
week, but claims remained low enough to suggest that most workers enjoy job
security…The Labor Department said Thursday that applications for jobless aid
rose by 20,000 to a seasonally adjusted 243,000…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.1% to 2365.
-VIX rose about 4% to 12.3.
-The yield on the 10-year Treasury rose to 2.607%. (The
expected rate hikes are taking a toll on bonds.
As prices fall, rates rise.)
It would be hard to find another day that played out like
Thursday. Declining stocks outnumbered advancing stocks by more than 2-to-1;
down volume exceeded up volume by nearly as much. So the S&P 500 declined right? Nope.
Pharma, Healthcare and Biotech carried the day (for the Index) while the idiots
in congress looked for more ways to screw-up the health care system.
For 8-years they were going to repeal it; now they are
going to repair it. Repair means
removing every one of the taxes and rules that brought in revenue and giving
tax credits to those who don’t need them. I didn’t think it possible, but what
we hear so far regarding the “repair” will actually do less and cost more. Don’t
get mad at me; I’m just the apolitical messenger. I tend to lump all
politicians together – neither “tax-and-spend Democrats” nor “cut-tax-and-spend
Republicans,” seem to have the good of the country as their primary focus. With
the United States National Debt approaching those of third-world countries (on
a debt to GDP basis), the politicians look more like Alfred E. Neuman every day…
I knew the Electorate was mad, but perhaps this isn’t
what they had in mind.
Sentiment ticked up to 84%-Bulls for Wednesday at the
close (This is always a day late since I get this data later in the day). On a standard deviation basis, that value
matches extremes seen during the dot.com crash.
The Pros are still selling based on Late-day action that
has been trending down on average over the last month. Today, we saw late-day
buying, but it’s hard to get too excited since the S&P 500 only finished up
2-pts on the day. Usually, the S&P 500 will follow the majority of
stocks. Since the majority was down
youuuge today (It was not a beautiful day.) the S&P 500 will probably trend down tomorrow.
The sum of my 16-indicators remained at -6 Tuesday, but
the longer term trend continues falling rapidly. Money Trend is pointing down
more sharply today too. All are bearish signs. 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.
Today there is one bullish sign: the old stand-by
Advance-Decline ratio is oversold. My guess is that it will become a lot more
oversold unless we see some other indicators join the bull-camp.
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)
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.
THURSDAY 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
Thursday, 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.
