Thursday, June 8, 2017
Unemployment Claims … What’s Up with the Bond Market? … Market Analysis … Trading ETFs and ETF Ranking
UNEMPLOYMENT CLAIMS (ABC News))
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.
“Fewer Americans applied for unemployment benefits last week as most U.S. workers continue to enjoy job security…Labor Department said Thursday that claims for jobless aid fell by 10,000 to a seasonally adjusted 245,000 last week.” Story at…
My cmt: The article pointed out that claims have been under 300,000 for more consecutive weeks than any time since 1970.
RATES DEFY LOGIC…WHAT’S UP WITH THE BOND MARKET? (Real Investment Advice)
“…the US 10-year bond is pretty close to 2% and the yield curve is flattening. So, what I see the bond markets saying is that future rate hikes by the Fed will be limited due to low nominal GDP growth aka secular stagnation.” - Ed Harrison at Credit Writedowns as quoted by Lance Roberts. Lance Roberts commentary at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 1pt to 2434.
-VIX dipped about 2% to 10.16.
-The yield on the 10-year Treasury slipped to 2.173%.
Not much change today, so I’ll just use the same summary again:
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) remains No 1. I would avoid XLE; its 120-day moving average is falling. Utilities are 2nd and that suggests investors are looking for some safety.
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
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained 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
Thursday, Price, 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.