The productivity of American workers was flat in the
first three months of this year, while labor costs rose at the fastest pace
since the second quarter of last year. The Labor Department said Monday that
productivity growth was zero in the January-March quarter…” Story at…
ISM SERVICES / FACTORY ORDERS (Reuters)
“U.S. services sector activity slowed in May as new orders
tumbled, but a jump in employment to a near two-year high pointed to sustained
labor market strength despite a deceleration in job growth last month… The
Institute for Supply Management (ISM) said its non-manufacturing activity index
fell six-tenths of a percentage point to a reading of 56.9… factory goods
orders dropped 0.2 percent in April..” Story at…
EARNINGS VS. PROFITS (Real Investment Advice)
“With corporate profits still at the same level as they
were in 2011, there is little argument the market has gotten a bit ahead of
itself. Sure, this time could be
different, but it usually isn’t. The detachment of the stock market from
underlying profitability suggests the reward for investors is grossly
outweighed by the risk… While investor appetites for risk remains robust in
the short-term, history suggests that such “willful blindness” has led to particularly bad outcomes.” Lance Roberts.
Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.4% to 2436.
-VIX rose about 3% to 10.02.
-The yield on the 10-year Treasury rose to 2.18%.
VIX finished a whisker above 10 today, but we still have concern. VIX closed
under 10 six-times in the last month. That is a rare event that portends
trouble ahead because it suggests extreme complacency. Trouble may be 6-months to a year ahead…or
sooner. Timing is an unknown since it is
a rare warning.
It does not by itself
predict a collapse in stock prices, but with VIX this low, it wouldn’t take too
much to upset the Apple Cart. See my prior Blog Post on VIX under MARKET REPORT /
ANALYSIS at...
My Sum of 17-indicators slipped from +10 to +7, but it is
still moving up nicely on a smoothed 10-day basis.
The S&P 500 is not currently exceeding its upper
Bollinger Band (2-std deviations) but it is close. RSI is still neutral so this isn’t a
screaming sell.
Utilities are outperforming the S&P 500 over the last
2-months (a bearish sign), but not by much so this is not a strong warning.
The Advance/Decline ratio was a little more positive so
it has switched to neutral from “overbought”. Wall St doesn’t put as much faith in this one
as they once did.
Market Internals declined to neutral on the market.
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) is No 1. I would avoid XLE and XLF;
their 120-day moving averages are falling.
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
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals
switched to neutral 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
Monday, Price was bullish; 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.
