Thursday, June 15, 2017

Jobless Claims … Philadelphia Fed … Industrial Production … Market Analysis … Trading ETFs and ETF Ranking

“The number of Americans applying for and receiving benefits after losing their jobs keeps going lower. Initial jobless claims fell by 8,000 to 237,000 in the seven days stretching from June 4 to June 10…” Story at…
“The region's manufacturing sector expanded in June, but at a slower pace than in May, as the general business conditions index decreased to 31.3 from 38.8 in May…” Story at…
“A drop in U.S. manufacturing output held back overall industrial production in May, an indication of uneven growth for the factory sector and only modest expansion for the overall economy. Industrial production -- a measure of output at factories, mines and utilities -- was unchanged from the prior month…” Story at…
Short report today…
I keep reading in the WSJ that technology needs to correct.  OK, perhaps it does, but keep in mind that the major indices tend to track each other. If tech falls, so will the S&P 500 and Dow.
I remain unimpressed on a short-term basis and it looks like we may see some retracement in the indices.
Longer term, I remain 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…
Technology (XLK) slipped to No. 3, as XLU (Utilities) took over 1st.  Given the recent drop in Tech, I’d sell XLK. I am going to sit on the sidelines and wait for a day or two. Traders may want to buy XLU, but recognize that if there is no correction XLU may not be the leader for long.  
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 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). 
Thursday, Price, is positive; 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.)
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.