“Oil prices slid more than 3 percent on Wednesday after
the U.S. government reported an unexpected increase in inventories of crude and
gasoline, fanning fears that output cuts by major world oil producers have not
drained the global crude glut very much. Crude stocks in the United States grew
3.3 million barrels to 513 million barrels, according to the U.S. Energy
Information Administration (EIA).” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.2% to 2433.
-VIX dipped about 1% to 10.39.
-The yield on the 10-year Treasury rose to 2.176%.
RSI popped up to 87 and is now overbought so RSI suggests
trouble for the markets.
Reviewing RSI (Simple Moving Average, 14-day):
Relative Strength measures the size of up-moves vs. all-moves
on a 14-day moving average basis and presents the result as a percentile. For
example if the RSI is 85, it means that the size of up-moves are in the 85th
percentile when compared to all moves over the 14-day period. If ALL
moves had been up, RSI would be 100 – a definite short term sell indicator. For
my purposes, 30 is oversold (suggesting a turn-around to the upside) and 80 is
overbought. If the up-moves and down-moves are equal in size over the 14-day
period, RSI would be 50.
New-High/New-low data is slipping, a bearish sign. Breadth (10-dMA of the %-of advancing stocks)
is falling, but it is still above 50% at 52.2%. In plain English it shows that
over the last 10-days 52% of stocks on the NYSE have gone up, so need to panic.
Market Internals remained neutral on the market and the
Sum of 17-Indicators was neutral on the day and is still pointing up on a
smoothed basis.
Repeating prior notes: Overall, I think the short-term
performance is somewhat limited; markets can go higher, but perhaps not too
much higher before we move back at least a couple percent. Longer term, I
remain cautiously bullish; I may worry 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…
Technology (XLK) remains No 1. I would avoid XLE; its
120-day moving average is falling.
Utilities are 2nd and that suggests investors are looking for
some safety.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total
portfolio)
Neutral with no positions recommended. - 5/24/2017
thru present.
-“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
WEDNESDAY 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
Wednesday, Price, Volume, Sentiment & 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 for my situation.
