Wednesday, June 21, 2017

Home Sales … Crude Inventories … ATA Trucking Jumps … Market Analysis … Trading ETFs and ETF Ranking

“Americans shopping for a house are facing an intensifying set of pressures: Fewer and fewer homes are being listed for sale, while prices are climbing at a pace that most incomes can't possibly match. The May sales report released Wednesday by the National Association of Realtors shows a housing market unable to meet the demand from would-be buyers. Sales edged up 1.1 percent in May to a seasonally adjusted annual rate of 5.62 million…” Story at…
“With WTI slipping into a bear market, global floating oil storage at a record high for this year, and Libya getting closer to its target of 1 million barrels of oil daily, things can hardly get any worse for oil prices. The EIA today, however, offered a tiny sliver of hope by reporting a 2.5-million-barrel draw in crude oil inventories.” Story at…
ATA TRUCKING UP (American Trucking Assoc.)
“American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 6.5% in May, following a 1.5% decline during April…Compared with May 2016, the SA index increased 4.8%, which was the largest year-over-year gain since November.” Press release at… 
My cmt: No recession here.
-Wednesday the S&P 500 was down about 0.1% to 2436.
-VIX was down about 1% to 10.75.
-The yield on the 10-year Treasury slipped to 2.152%.
New-Lows are now greater than New-Highs.  That’s a pre-requisite for a correction. Doesn’t mean we’ll see one, but it is necessary for one to occur. This stat is usually a slow one that lags rather than leads. This time it switched negative just 2-days after the recent all-time high.
Advancing volume is falling; breadth (% of stocks advancing) is falling; closing tick (sum of last trades of the day) was -677; Money Trend is drifting down; The sum of 17-indicators is down on a smoothed basis; Smart money (late-day-action) is falling.  Bottom line – indicators continue to get more bearish, but not drastically so.
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…
Over the last 3-days there have been 3 different ETFs ranked #1. Today is was Health Care (XLV). Yesterday’s highest ranked ETF (ITA) slipped to #3. I’ve been waiting for a clear leader to get back in. Perhaps it will be Health Care. It was up 4.1% today, possibly based on comments from CNBC. Utilities, XLU, was #2. 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 remain 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). 
Wednesday, Price is positive; Volume, Sentiment & VIX indicators were neutral. (With VIX recently below 10 (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.