Thursday, June 29, 2017

Jobless Claims … GDP … Market Analysis … Trading ETFs and ETF Ranking

JOBLESS CLAIMS (Washington Examiner)
“New claims for unemployment benefits edged up by 2,000 to 244,000 in the third week of June, the Department of Labor reported Thursday.” Story at…
My cmt: This was in line with expectations.
GDP (Reuters)
“The U.S. economy slowed less sharply in the first quarter than initially estimated due to unexpectedly higher consumer spending and a bigger jump in exports.
Gross domestic product increased at a 1.4 percent annual rate instead of the 1.2 percent pace reported last month…” Story at…
-Thursday the S&P 500 was down about 0.9% to 2420.
-VIX rose about 14% to 11.44.
-The yield on the 10-year Treasury rose to 2.267%.
Tuesday, Wednesday and Thursday were all statistically significant days based on price-volume moves. The moves were down; up; then down today. That sort of and back and forth movement on statistically significant days can indicate a top. On a positive note, the Index finished about a half percent above the 50-dMA Wednesday so perhaps the dip-buyers will save the day Friday. I’d like to see the 50-day (now about 2410) get tested on a closing basis. We’ll see.
Short-term I am watching – it still looks like a small pullback is likely, but certainly not guaranteed. As of now the S&P 500 has pulled back 1.4% from the all-time high. 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) moved back into #1; Healthcare (XLV) was #2. I hold these ETFs as trading vehicles. Until we get a handle on the overall direction of the market I am on hold. I don’t see a clear leaders yet.
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 Positive 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). 
Thursday, 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.