Friday, May 12, 2017

Consumer Price Index … Retail sales … Michigan Sentiment … Port of Virginia Shipments Up ... Valuation … Obamacare 49% Price Hikes … Market Analysis … Trading ETFs and ETF Ranking

CPI (Reuters)
“U.S. consumer prices rebounded in April amid increases in the cost of gasoline, food and rents, pointing to steadily rising inflation that could keep the Federal Reserve on track to raise interest rates next month. The Labor Department said on Friday its Consumer Price Index rose 0.2 percent…” Story at…
RETAIL SALES (Bloomberg)
“A pickup in U.S. retail sales last month adds to signs of steady consumer spending that will help propel the economy after a first-quarter slowdown, Commerce Department data showed Friday. Purchases rose 0.4% (forecast was 0.6% rise) after a 0.1% increase the prior month (revised from 0.2% decline)…” Story at…
“Consumer sentiment brightened in an early May reading as Americans turned more bullish on their income expectations. The University of Michigan’s closely-watched confidence gauge jumped to 97.7 from 97.0 in April.” Story at…
“The Port of Virginia® moved 225,196 twenty-foot equivalent units (TEUs) [containers for us civilians] in April, which is growth of 4.6 percent when compared with the same month last year. The port has handled at least 220,000 TEUs every month since October 2016.” Press release at…
My cmt: No recession here.
VALUATION (The Felder report)
Chart and commentary at…
My cmt: Now, Buffet isn’t worried…this time is different?
Obamacare has been a drag on the economy…
“Premiums for plans covering families increased even higher in 2017 — 20 percent higher than the prior year. The average for families selecting plans was $997 per month this year, which is 49 percent higher than in 2014, eHealth said.
The average deductible for a family plan sold on eHealth is now $8,322. In 2017, the average premium for a plan covering a family of four is more than $14,300 annually — or $1,195 per month…” Story at…
My cmt: I have a friend who got caught in this trap. He retired early after calculating all expenses and adding a contingency for health care. It wasn’t enough.  He has little faith that the Republicans will come up with anything better. To me, the idea that one can buy insurance after you get sick (with no penalty for pre-existing condition) is untenable.  Could you buy car insurance after an accident? Such a system isn’t economically workable – only the idiots in congress could come up with such a plan. As a famous man once said…
“The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.” - Alexis de Tocqueville (1805-1859).
Tax-and-spend Democrats or cut-tax and spend Republicans; pick your poison.

As a teenager, I'd get frustrated by people who I thought were not smart, and my father told me, "Son, don't ever get frustrated by stupid people. Being mad at stupidity is like being mad at grass - it's everywhere." – James Carville.
(Since the Congress is getting away with this insanity, I guess we voters are the stupid people.)

-Friday the S&P 500 fell about 0.2% to 2391.
-VIX dropped about 2% to 10.40 at the close. (The options boys aren’t worried.)
-The yield on the 10-year Treasury slipped to 2.324%. (The Bond Ghouls are.)
Bear signs:
-RSI was 81 Tuesday signaling overbought.
-The percentage-of-stocks-advancing over the past 10-days rose to 49.3% today; that means that most stocks on the NYSE have gone down in the last 10-days, but this stat isn’t accelerating down. It’s not very bearish.
-My Sum of 17–indicators improved from -3 to -1 on the day, but the 10-day value is still headed sharply down.
-New-high/new-low data is bearish.
Neutral signs:
-Market Internals improved to neutral today, because up-volume (smoothed 10-day value) improved.
Bull signs:
One of the few bullish indicators I follow is late-day action. It is headed up on a smoothed 20-day basis. I place a high value on late-day action since it usually indicates what the Pros think.  Apparently, they think this market can go higher.
Overall, indicators are slightly bearish, but there isn’t an acceleration of bear signs. I am neutral short-term and cautiously bullish long term. That short-term neutral may change soon depending on market action.
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-day moving average is falling.
No.1 remains Technology (XLK). I continue to hold the XLK.
“At each major market peak throughout history, there has always been something that became “the” subject of speculative investment. Rather it was railroads, real estate, emerging markets, technology stocks or tulip bulbs, the end result was always the same as the rush to get into those markets also led to the rush to get out. Today, the rush to buy “ETF’s” has clearly taken that mantle…” – Lance Roberts. Commentary at…
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
No positions. I would take profits on long positions now and watch the market for confirmation, either direction.
-“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.
I haven’t done well in my short positions over the past 6-months; conversely, I have a decent record in long positions.
Market Internals switched to neutral 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). 
Friday, Price was positive; Sentiment, Volume & VIX indicators were neutral. (With VIX recently below 10, VIX may be prone to incorrect signals. Usually, a rising VIX is a bad market sign; now it may just signal normalization of VIX, i.e., VIX and the Index may both rise. As an indicator, VIX is out of the picture for a while.)
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, but I consider it fully invested.
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.