Wednesday, July 5, 2017
FOMC Minutes … Factory Orders … New-Highs Suggest Trouble … Market Analysis … Trading ETFs and ETF Ranking
FOMC MIINUTES: FED WORRIED ABOUT BEING TO ACCOMODATIVE (CNBC)
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.
“Several Fed officials voiced concern over the effect that their recent measures were having on financial market [and] …that keeping policy loose was posing increasing risks to financial stability and the economy.” Story at…
FACTORY ORDERS (Reuters)
“New orders for U.S.-made goods fell more than expected in May, but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.8 percent…” Story at…
SMOOTHED NEW-HIGHS ARE FALLING – SUGGESTING TROUBLE
….but no guarantee – they could reverse upward and the signal is not always correct. None are.
FIXING COMPUTER PROBLEMS ON OLDER WINDOWS 7 SYSTEMS
As I have noted several times my laptop has been acting up causing start-up problems and inability to run programs after getting the computer started, often after multiple tries and restarts/shut-downs. When running the “Check for performance issues” in the “Troubleshooting” application in Control Panel, I found “Superfetch” was not always running. I took the following advice from the internet. “Click the Windows Orb (Start), type %SystemRoot%\Prefetch and press Enter. Now delete everything.” I deleted all FILES not the folder within the Superfetch folder. Computer is working better now. We’ll see.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 0.2% to 2433.
-VIX slipped about 1% to 11.07.
-The yield on the 10-year Treasury dipped to 2.322%.
Today’s numbers were weak in spite of the upward finish: Declining stocks outpaced Advancing stocks by nearly 2 to 1; declining volume was nearly double the advancing volume; the spread (New-highs – new-low) slipped too. Given the numbers I’d expect the S&P 500 to finish somewhat lower tomorrow.
Overall though, not much changed. Signals aren’t strong either way. Short-term it still looks like a small pullback is likely, but certainly not guaranteed. 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; but Healthcare (XLV) is close behind. Either would be OK at this point.
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
WEDNESDAY 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
Wednesday, 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.)
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.