Monday, April 24, 2017

Chicago Fed National Activity Index (CFNAI) … Saut Commentary … … Stock Market Analysis … Trading ETFs and ETF Ranking

“Led by slower growth in employment-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to +0.08 in March from +0.27 in February. Two of the four broad categories of indicators that make up the index decreased from February, and one category made a negative contribution to the index in March. The index’s three-month moving average, CFNAI-MA3, decreased to +0.03 in March from +0.16 in February, but remained positive for the fourth consecutive month.” Press release at…
For analysis of the report see Advisor Perspectives at…
“…late last week we advised participants to get their “buy lists” ready because a rally may be in the cards. We still feel that way. Indeed, since being in cautionary mode from the first week in February our models took a decided turn for the better last week despite the backdrop of nasty geopolitical events, mixed economic reports, and some earnings misses. Our sense is that over the next few weeks the lack of “selling pressure” is going to allow stocks to attempt to lift. While we don’t think it will be a vigorous “lift,” it should still be a lift.” Commentary at…
-Monday the S&P 500 rose about 1.1% to 2374. 
-VIX collapsed about 26% to 10.84 at the close.
-The yield on the 10-year Treasury rose to 2.276%.
Monday we had another statistically significant up-day (based on statistical analysis of daily market volatility) and that is followed by a down-day about 62% of the time.  That may be true Tuesday (there could be some profit taking), but I think we should see a run to all-time highs and then higher over the next several months. It may be slow due to the sell-in-May-and-go-away mantra, but overall I think the markets will move higher in the near term. The last 3-statistically significant days have all been “up” with each one stronger than the one before. That suggests more buying ahead, although probably not straight up.
We’ve been watching the chart recently and the Index broke decisively above the 50-dMA and above the red-line I had drawn on the charts – looks bullish to me. My Sum of 16-Indicators was -8 a week ago; today it is +8.  That’s a decent bullish swing.  It was +2 yesterday; so there was improvement prior to today’s big jump up. Market Internals look good and new-high/new-low data has improved and is looking bullish.
Bollinger Bands are at the upper band; that’s usually a bearish sign, but the bands are very close together and RSI is relatively low, so the Index can move higher. If it happens, that will push the upper Bollinger Band higher. Bottom line is that Bollinger Bands may not be giving a good reading now.
I must say, I never expeced the French election to have this much effect on the markets.  Apparently, the fate of the EU rides on this one French election.  This is only the first round, but I suppose the strong showing of the moderate candidate suggests the right-wing Marie Le Pen is less likely to prevail in the 2-person runnoff that ius coming. One wonders whether this is just a temporary relief rally with more selling to come. It could be, but the numbers suggest otherwise.
As far as a near-term correction, it looks more like “no-correction” is the call now. I have shifted to moderately bullish.
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 XLE; its 120-dMA is now trending down.
No1 is Technology (XLK).
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
No positions.
I was shellacked in recent trades so no short-term trading for a while.  I have been a passable (not great) trader in recent years, but last year and the start of this one have been disastrous.
Market Internals are positive 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). 
Monday, Sentiment was negative; Price was positive; Volume & VIX indicators were neutral.
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, based on short-term indicators. Remainder is 50% G-Fund (Government securities). This is a conservative retiree allocation.
There have been no long-term Buy or Sell signals in a while.  The last signal was a BUY on 23 February and the last actionable signal was a BUY (from a prior sell) on 15 November 2016.