Tuesday, May 9, 2017

JOLTS Job Openings … Market Analysis … Trading ETFs and ETF Ranking

America has 5.7 million openings. That's close to the record number of job openings reported by the Labor Department since it started tracking them in 2000…Bad news: Not all employers can find the skilled workers they need. 
My cmt: This stat has only been kept since year 2000.
Additional Charts and analysis are available from Advisor Perspectives (dshort.com) at…
-Tuesday the S&P 500 slipped 0.1% to 2397 late in the day on news that N. Korea will do more nuclear testing. 
-VIX rose about 2% to 9.96 at the close.
-The yield on the 10-year Treasury rose to 2.398%.  
Complacency abounds: The VIX is below 10; My Calm-before-the-storm indicator has been screaming danger for so long am I am now ignoring it; there have been no large-volume days in either direction since December of 2016. These conditions may persist for a lot longer so there’s no point in getting worked up. They are, however, important signs that a decent correction is coming. We just don’t know when.
Bear signs:
RSI hit 81 today. 80 is “overbought”; that’s a concern for the bulls, at least in the short run. 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 dropped to 49.2%, so most stocks on the NYSE have gone down in the last 10-days.
Market Internals switched to negative today. Advancing volume (smoothed 10-day value) is falling. My Sum of 17–indicators dipped from +2 to -3 on the day.  The 10-day value has turned sharply down.
Better signs:
One of the few neutral/bullish indicators I follow is late-day action. It is flat on a 20-day basis and up on a smoothed 20-day basis.
Overall, there are enough signs that point down to worry, 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.  All in all, I am cautious both short-term and long term, though on a long term basis, the Fed is a concern and Geo-Political issues (Korea) may arise at any time.
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.
Market Internals are 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). 
Tuesday, Price was positive; Sentiment was negative; Volume & VIX indicators were neutral. (With VIX 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.