Thursday, April 6, 2017
Jobless Claims … … Stock Market Analysis … Trading ETFs and ETF Ranking
JOBLESS CLAIMS (MarketWatch)
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.
“The number of Americans who applied for unemployment benefits last week sank by 25,000 to 234,000, marking the second-lowest level of the current economic expansion and reflecting a tight labor market in which firms say it’s hard to find good help.” Story at…
Chart from Index Indicators at…
The S&P 500 is very near its 50-dMA so it’s not surprising to see the % of stocks above the 50-dMA has been falling. The S&P 500 is the worry though. If it falls below its 50-dMA it could be trouble for the markets.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.2% to 2357.
-VIX dropped about 4% to 12.43 near the close.
-The yield on the 10-year Treasury was up slightly to 2.339%.
XLI improved a bit compared to the S&P 500, but it is still mostly down. Cyclical stocks usually lead the Index so this remains bearish. The Advance-Decline Ratio (a measure of breadth) is again “overbought” at today’s close, a bearish signal. Overall though, signals improved: My Sum of 16-Indicators was +4 today, up from 0 yesterday.
Bottom line: The S&P 500 is reaching a break point on the charts. “Up” breaks the down-trend, “down” brings it close to or below the 50-dMA. We’ll see.
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…
Utilities (XLU) and Emerging Markets (SCHE) were the only losers on the day. I would avoid Energy (XLE); currently its 120-dMA is declining.
1. Technology Select Sector SPDR ETF (XLK) remains the top ranked ETF.
(I took positions in XLF and XLK Wednesday, 29 March.) My guess is that XLF will rebound after a correction as the interest rates rise.
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched to 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).
LONG TERM INDICATOR
Thursday, the Price indicator is positive; Sentiment, Volume & VIX indicators were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
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 based mostly on low volume at the test of the 50-dMA.