“Home purchase contract signings declined again in May,
another sign of the headwinds working against momentum in the housing market. The
pending home sales index from the National Association of Realtors slid 0.8%,
marking the third-straight monthly decline.” Story at….
CRUDE INVENTORIES (Reuters)
“Oil futures climbed more than 1 percent on Wednesday to
their highest in more than a week as buyers were encouraged by a small weekly
decrease in U.S. production and shrugged off a surprise build in crude
inventories in the world's top oil consumer. The U.S. Energy Information
Administration (EIA) said crude stocks rose 118,000 barrels…” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 0.9% to 2440.
-VIX fell about 9% to 10.03.
-The yield on the 10-year Treasury rose to 2.225%.
-Wednesday was a statistically significant (big) up-day
and that is usually followed by a down-day the next day. We had big down-day
(stat-sig) yesterday and back and forth movement of statistically significant
days can indicate a top. It doesn’t have to though. On a positive note, the
Index finished about a half percent above the 50-dMA Wednesday. Perhaps the dip-buyers have saved the day. I
doubt it though; the Bollinger Band Squeeze remains in play.
Short-term I am watching – it still looks like a small
pullback is likely, but certainly not guaranteed. 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 Healthcare (XLV) was #1 and Biotechnology (IBB) slipped
to #2. I am waiting a bit before moving back in due to a few bearish
indications. Other than Healthcare, the remaining ETFs are showing little
dispersion and that can be a sign of trouble.
Healthcare is doing well because investors are betting there will be
little or no change to Obamacare.
Utilities, XLU, is now lagging the S&P 500 on shorter
time-frames. So the Strong Utilities warning is fading.
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
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals
switched to 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 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.)
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.
