Monday, July 10, 2017

Consumer Credit … A New Crash? … Recession? – Nah … Percentage of Stocks above their 200-dMA … Market Commentary … Trading ETFs and ETF Ranking

“Total outstanding consumer credit increased by $8.1 billion in April ( consensus $15.0 billion) after increasing an upwardly revised $19.6 billion (from $16.4 billion) in March.” Charts and details at…
A NEW CRASH? (Guardian)
“World leaders have been warned to guard against another financial crash after a steep rise in risky bank lending over the past year that could threaten the stability of the global financial system.” Story at…
RECESSION? – NAH: THE BIG FOUR (Advisor Perspectives)
“There is…a general belief that there are four big indicators that the [NBER] committee weighs heavily in their cycle identification process. They are:
Nonfarm Employment; Industrial Production; Real Retail Sales; and Real Personal Income (excluding Transfer Receipts)” (The following chart is a composite of the “Big Four” indicators from
Charts and commentary at…
Only 46% of stocks on the NYSE were above their 200-dMA as of Friday when this data was published. A number below 50% suggests possible problems for the market. It’s not a huge concern now. It’s just another way of saying the market has not made up its mind – new-highs; or a pullback? We don’t know.
Chart from…
-Monday the S&P 500 was up about 0.1% to 2427.
-VIX dropped about 1% to 11.11.
-The yield on the 10-year Treasury slipped to 2.366%.
No strong direction yet, so not much change…
Market Internals deteriorated.  My daily sum of 17-indicators remains in neutral territory.  Money Trend is neutral. The % of advancing stocks is in positive territory, but is still declining on a 10-day basis (down to 51.6% today). Late Day Action was bearish today with a selloff after 2PM.  Traders don’t want to hold positions indicating they are skittish. New-highs were flat (on a smoothed basis) and that seems to be one of the few green shoots. To me it looks like, the market still hasn’t made up its mind at least in the short-term.
Longer-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) remained  #1.
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 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). 
Monday, Sentiment was negative. Price, Volume, & 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.