“For Q1 2017, the blended earnings growth rate for the
S&P 500 is 13.5%. If 13.5% is the actual growth rate for the quarter, it
will mark the highest (year-over-year) earnings growth for the index since Q3
2011 (16.7%).” - 5 May Earnings Insight. Full report at…
CRUDE INVENTORIES (Reuters)
“U.S. crude stockpiles posted their biggest one-week
drawdown since December last week as imports dropped sharply, while inventories
of refined products also fell, helping boost oil prices that have been weighed
down by concerns about oversupply. Crude inventories USOILC=ECI fell 5.2
million barrels in the week to May 5…” Story at…
S&P 500: 3000 or 1500? (Real Investment Advice)
“…in the short-term it may seem like the current advance
will never end…However, without a sharp improvement in the underlying
fundamental and economic back drop the risk of failure is rising sharply…[The move
up]…will likely be a one-way trip higher and it should be realized that
such a move would be consistent with the final stages of a market melt-up. Just
as a reminder…’gravity is a bitch.’” – Lance Roberts. Commentary at…
My cmt: Good article with a lot of charts, data and
commentary.
EERIE CALM SHROUDS MARKETS (Financial Sense)
[We should] “…remind ourselves, that large moves
typically do not happen when volatility is high, and investors are anxious and
nervous. It happens when things are calm, and investors see TINA (there is no
alternative). Geopolitics and the divergence of policy, and asset/liability and
duration mismatches have not gone away. It is a reminder that we are often
lulled into complacency just before being shocked by how treacherous things
really are.” – Marc Chandler, Global Head of Currency Strategy at Brown
Brothers Harriman. Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.1% to 2400 (rounded).
-VIX rose about 3% to 10.21 at the close.
-The yield on the 10-year Treasury rose to 2.417%.
One clue about where the market is headed is to look at
the spread (on a percentage basis) of the S&P 500 vs Utilities (XLU). If
investors are worried about a pullback XLU will outperform the Index.
Subtracting the XLU from the Index would give a negative number since the
%-change in XLU would be higher than the S&P 500. If the Spread (shown red)
is in negative territory and falling it is bearish for the market. It’s not a
great indicator, but combined with others it can be valuable. Here it shows
some investor confusion as the spread has recently bounced around the zero
black line.
Bear signs:
RSI was 81 yesterday, but slipped to 77 today. 80 is
“overbought. It can remain above 80 for a week or so before markets react down,
so that leads to a repeat of yesterday’s comment… The last time RSI reached 80+
(for 8-days) the S&P 500 pulled back about 3% - not much. I said at the time “correction
postponed.” Perhaps it’s back. The
percentage-of-stocks-advancing over the past 10-days rose to 49.9% today, but
that still means that most stocks on the NYSE have gone down in the last
10-days.
Market Internals remained negative today. Advancing
volume (smoothed 10-day value) is falling. My Sum of 17–indicators was little
changed on the day, but the 10-day value is still headed sharply down.
Better 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.
Repeating: Overall, there are worrisome signs that point
down, but these could reverse quickly so at this point we’ll just have
to wait. On a longer term basis, there’s
not much negative on the horizon…except the Fed...and a few other unpredictable Black
Swans.
The S&P 500 chart doesn’t look great since the Index hasn’t
gotten much above its prior high from 1 March. All in all, I am neutral short-term and cautiously
bullish long term.
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…
I would avoid XLE; its 120-day moving average is falling.
No.1 remains Technology (XLK). I continue to hold the
XLK.
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. Long time readers know that my short-term trading has been abysmal over the last 6-months - too negative.
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remain
negative 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
Wednesday, Price was positive; Sentiment was negative;
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.)
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, but I consider it fully invested.
