Friday, May 5, 2017
Payroll Report … Average Hourly earnings … Recession? – Nah … Chart Points to 2500 … Market Analysis … Trading ETFs and ETF Ranking
PAYROLL REPORT (CNBC/Reuters)
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.
“Job creation in April bounced back from a disappointing March, with nonfarm payrolls growing by 211,000 while the unemployment rate fell to 4.4 percent, its lowest since May 2007.” Story at…
AVERAGE HOURLY EARNINGS (XM)
“Looking at average hourly earnings, those came in at a 0.3% growth rate as expected. Hourly earnings for March were revised down to 0.1% from the previous 0.2%.” Story at…
My cmt: Overall the news was good for the economy. This is the sort of good news that worries the markets because the FED is more likely to raise rates at the next meeting. (Actually, that’s what the markets expect.) The futures were down at the release, but the markets shrugged it off later in the day.
RECESSION? – NAH: THE BIG FOUR (Advisor Perspectives)
“There is…a general belief that there are four big indicators that the [NBER] committee weighs heavily in their cycle identification process. They are: Nonfarm Employment; Industrial Production; Real Retail Sales; and Real Personal Income (excluding Transfer Receipts)”
(The following chart is a composite of the “Big Four” indicators from dShort.com.)
Additional charts and commentary at…
My cmt: It would take a steep drop to make us worry about recession; no recession is indicated by the chart above.
CHART POINTS TO 2500 (CNBC)
“…with another rise in the VXV-VIX ratio in April, Suttmeier (BoA Technician) thinks that the trend "favors a breakout through 2,400…[and] could run up as high as 2,500 in the short term.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.4% to 2399.
-VIX rose about 0.75% to 10.56 at the close.
-The yield on the 10-year Treasury dipped slightly to 2.351%.
Woo woo! The Bulls are back today.
-My Sum of 16-Indicators was at +4 today vs. 0 yesterday. Longer term, the indicators continue to improve.
-The Late-day action (Smart Money) was strongly up today and it continues to trend higher. The Pros are optimistic.
-The 10-dMA of percentage of stocks advancing bounced up to 54.1% today – up from 51.5% yesterday.
Sentiment (%-bulls) is giving a sell signal, but sentiment alone is not a great timing indicator. I remain bullish short-term and cautiously bullish longer 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)
I was shellacked in recent trades so no short-term trading for a while. Long is the call now though, as it has been since the Index closed above the 50-dMA.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals are neutral on the market, but they improved significantly today.
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 was positive; Sentiment was negative; 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, but I consider it fully invested.