Tuesday, June 27, 2017

Consumer Confidence … Market Analysis … Trading ETFs and ETF Ranking

“Consumers are still plenty confident in the U.S. economy, although they don’t expect growth to accelerate anytime soon, a survey shows. The Conference Board said its consumer confidence index rose to 118.9 last month from 117.6.” Story at…
-Tuesday the S&P 500 was down about 0.8% to 2419.
-VIX jumped up about 12% to 11.06.
-The yield on the 10-year Treasury slipped to 2.197%.
-Tuesday was a statistically significant (big) down-day and that is usually followed by an up-day the next day.
Some random bear thoughts:
-Smart Money sold hard into the close all afternoon so the Pros are looking more bearish. That trend is also true on a 20-day basis and the trend lines are headed down.
-Advancing volume is falling and over the last 10-days only 47% of the volume has been up.
-My Money Trend indicator has been dropping for 2-weeks and is now in negative territory.
-The Sum of 17-indicators is below zero and falling.
-Over the last 10-days, more than half of stocks on the NYSE have gone down.
-The Index is down less than 2% from its all-time high.  
-Bollinger Bands remain in a squeeze.  This just means that the moves in the S&P 500 have been exceptionally small and this suggests trouble.  This mirrors my calm-before-the-storm indicator.
Short-term I am watching – it still looks like a small pullback is likely, but certainly not guaranteed. Let’s see if the dip-buyers move in. Long term, I’m cautiously bullish; I will worry more in late-summer and into early fall.
TODAY’S 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…
Today Biotechnology (IBB) was again ranked #1. I couldn’t bring myself to buy today due to the Bollinger Band squeeze and other bearish signals.
Utilities, XLU, is still beating the S&P 500. Strong Utilities often means trouble.
I would avoid XLE; its 120-day moving average is falling. 
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
Neutral with no positions recommended. - 5/24/2017 thru present.
I am still not bullish enough to take a long position in the trading portfolio.
-“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.
-“Commandment #1: “Thou Shall Not Trade Against the Trend.” - James P. Arthur Huprich
Market Internals switched to 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 is positive; Volume, Sentiment & VIX indicators were neutral. (With VIX recently below 10 for a couple of days (May and June), 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 for my situation.
The previous signal was a BUY on 2 June and the last actionable signal was a BUY (from a prior sell) on 15 November 2016.