Tuesday, April 25, 2017

Home sales … Consumer Confidence … Market Analysis … Trading ETFs and ETF Ranking

HOME SALES (MarketWatch)
“Sales of newly-constructed homes throttled to the highest in nearly a year in March as the housing recovery picked up steam. New-home sales ran at a seasonally-adjusted annual rate of 621,000…” Story at…
“Consumer confidence dipped in April but remained near a 16-year high amid solid job and income growth. An index of Americans' outlook fell to 120.3 from a downwardly revised 124.9 in Mar…” Story at…
-Tuesday the S&P 500 rose about 0.6% to 2389. 
-VIX slipped about 0.7% to 10.76 at the close.
-The yield on the 10-year Treasury rose to 2.334%.
Random Thoughts:
The 5-10-20 Timer System signaled “Buy” today. Both the 5-dEMA and the 10-dEMA or above the 20-dEMA.
Bollinger Bands are overbought, but don’t’ worry. The market has been so calm that Bollinger Bands (2-std deviations above and below the Index) were very close together.  A down move would have quickly given an oversold reading. As it happened, the up-move triggered an “overbought” reading.  The bottom line is that Bollinger Bands may not be giving a good signal now.
Here come the dip-buyers:
Tuesday 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 Wednesday (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.
My Sum of 16-Indicators was +7 today; yesterday it was +8. Longer term the indicators have significantly improved. Market Internals look good and new-high/new-low data continues to improve and remain bullish.
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). 
Tuesday, 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.