Wednesday, April 26, 2017

Crude Inventories … FED on Hold? … Market Analysis … Trading ETFs and ETF Ranking

“Oil prices rebounded from earlier losses on Wednesday after data showed a larger-than-expected falloff in U.S. crude inventories, a salve for investors after several days of declines founded on worries about the slow pace of global efforts to reduce a glut. The U.S. Energy Department said crude stocks dropped 3.6 million barrels last week…” Story at…
FED ON HOLD? (Investopedia)
“In its latest US Economic Viewpoint report, Bank of America says that Fed Chairman Janet Yellen and the central bank are likely to take the summer off when it comes to announcing a rate hike at its June meeting. But don't be fooled. BofA analysts see the Fed announcing rate increases five times between now and the end of 2018.
My cmt: The next FED meeting is May 2-3, but it is widely believed there will be no rate hike in May.
-Wednesday the S&P 500 was down 0.05% to 2387. 
-VIX rose about 0.8% to 10.85 at the close.
-The yield on the 10-year Treasury dipped to 2.308%.
The S&P 500 was up and down all day depending on the news from the Politicians (apparently). It finished down on the day and tanked late in the day, down more than 10 points after 1PM. Even with the down day there were bullish signs: advancing stocks outpaced declining stocks by a decent margin (57% advancing); up-volume was higher than down volume; and there were almost 300-new-highs with only 11-new lows.  Those are reasonably bullish numbers and would usually portend an up day Thursday.
Recently we’ve seen mostly bullish signs:
-5-10-20 Timer System signaled “Buy” yesterday. That’s when the 5-dEMA and the 10-dEMA are higher than the 20-dEMA.
-My Sum of 16-Indicators was unchanged at +7 today. Longer term the indicators have significantly improved. Market Internals look good and new-high/new-low data continues to improve. They’re all bullish signs.
-Money Trend is moving sharply up – bullish too.
Bollinger Bands (2-std deviations above and below the S&P 500 Index) are overbought, but it doesn’t mean much yet since the Bands were so close together any move would have triggered an overbought or oversold; we can ignore this signal for a while.
The bad news is that if this rally is really about Trump’s policies, the market could be in serious trouble.
I remain bullish short-term and cautiously bullish longer term. The Markets will be watching the FED. That big bear may be lurking in 2018 depending on what the FED does.
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…
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.  Long is the call now though, as it has been since the Index closed above the 50-dMA.
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). 
Wednesday, 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.