Thursday, July 27, 2017
Durable Goods Orders … Jobless Claims … Stock Market Commentary … ETF Trading
DURABLE GOODS ORDERS (USA Today)
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.
“Orders for long-lasting U.S. factory goods posted the biggest gain in nearly three years last month, pulled up by a surge in demand for civilian aircraft... orders for durable goods — which are meant to last at least three years — climbed 6.5% in June…” Story at….
JOBLESS CLAIMS (Reuters)
“The number of Americans filing for unemployment benefits rebounded from a three-month low last week, but remained below a level consistent with a tightening labor market. Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 244,000 for the week ended July 22…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.1% to 2475.
-VIX was up about 5% to 10.11.
-The yield on the 10-year Treasury slipped to 2.298%.
RSI is the indicator that is screaming sell right now. In the short-term, it’s going to take another negative signal to get us worried about a pullback.
The call is NEUTRAL on a short-term basis. Longer-term, I’m cautiously bullish; I will worry more in late-summer and into early fall, but I remain fully invested.
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, Biotech (IBB) ETF remains #1. I would avoid XLE; its 120-day moving average is still falling.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
I take a portion of my cash and apply it strategically to improve returns in cash. My short-term trading has never been about get-rich-quick.
I haven’t been doing much in the trading portfolio – too busy to worry about it; but the call is now NEUTRAL as noted above.
-“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; the 10-day advancing volume is now falling.
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, Sentiment, Volume, & VIX indicators were neutral. (With VIX recently below 10 for a couple of days (May and June, and now July), VIX may be prone to incorrect signals. Usually, a rising VIX is a bad market sign; now it may move up, but that might 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.