“…the markets broke below the 50-dma on Wednesday and
triggered a short-term “sell signal” as shown in the lower part of the chart. Importantly, these signals when
previously triggered have denoted periods of increased volatility and
corrective actions until they are complete. Despite the rally on
Thursday, I suspect the “shot across the bow” on Wednesday was just that, a warning shot to investors
which suggest reflexive rallies should be used to rebalance and de-risk
portfolios for now. We need to see what happens over the
next week to see if the markets can regain their footing. However, for now, holding a little dry powder continues to make some sense.” Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.7% to 2382.
-VIX dropped about 18% to 12.04 at the close. (So much
for fear – the market is not worried.)
-The yield on the 10-year Treasury rose slightly to 2.237%.
There was a big bullish day today with fully 85% of the
volume moving up and 75% of all stocks on the NYSE higher in price. What’s not
to like?
My sum of 17-indicators continued down on a smoothed
basis, but was unchanged at -4 on the day. “-4” means that most indicators are
now negative.
There was late-day selling today that again indicates
that the Pros aren’t buying this rally.
Over a 20-day smoothed basis the “Smart Money” (late-day-action) is flat
– a neutral signal.
On a 10-day basis breadth did pick up a bit today and
50.3% of stocks have been up over the last 10-days.
Overall, it still seems like the bears may be in control,
but we should have a better idea in a couple of days. I’m trying to get more
bullish, but I hate to add to stock-investments when the late-day-action has
been down recently.
An important point:
On a long-term basis, the trend is still UP.
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…
Technology (XLK) moved up to No 1 again & the Schwab
Emerging Market ETF (SCHE) slipped back to 3rd place. I continue to hold the
XLK. (In a downturn XLK and IWM would probably be among the poorer performers.)
I would avoid XLE; its 120-day moving average is falling.
In general, odd things can happen to the ETFs during a
correction; all turn equally bad as the markets decline.
“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. Let’s watch the market for confirmation, up
or down.
-“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 good record in long positions.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
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).
LONG TERM INDICATOR
Friday, Price is 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.)
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.
