“…We hold these truths to be self-evident, that all men
are created equal, that they are endowed by their Creator with certain
unalienable Rights, that among these are Life, Liberty and the pursuit of
Happiness. — That to secure these rights, Governments are instituted among Men,
deriving their just powers from the consent of the governed, — That whenever
any Form of Government becomes destructive of these ends, it is the Right of
the People to alter or to abolish it…” – July 4, 1776
ISM INDEX (Institute for Supply Management)
“Economic activity in the manufacturing sector expanded
in June, and the overall economy grew for the 97th consecutive month,
say the nation's supply executives in the latest Manufacturing ISM® Report
On Business®…"The June PMI® registered 57.8 percent, an increase of
2.9 percentage points from the May reading of 54.9 percent.” Press release at…
CONSTRUCTION SPENDING (Census Bureau)
“Construction spending during May 2017 was estimated at a
seasonally adjusted annual rate of $1,230.1 billion, nearly the same as the
revised April estimate of $1,230.4 billion. The May figure is 4.5 percent above
the May 2016 estimate…” Press release at…
FACTORY ACTIVITY (Reuters)
"U.S. factory activity rose sharply in June to its highest level
in almost three years suggesting economic growth in the second quarter gained
some steam, while construction spending held steady in May.” Story at…
AUTO SALES (USA Today)
"Sputtering car sales are finally backing up the auto
industry.
Fueled almost entirely by plunging sales of small cars
and sedans, a steady decline in U.S. auto sales in the first half of 2017
promises to end the auto industry's two-year streak of record sales.” Story at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 0.2% to 2429.
-VIX rose about 0.4% to 11.22.
-The yield on the 10-year Treasury rose to 2.35%.
Pre-Holiday action followed the script today: big opening
on low volume followed by some profit taking later in the day and a finish with
a gain. (My forecasts are always best after-the-fact.)
It’s hard to make much of today’s action given the
low-volume so I’ll dispense with too much analysis. Sentiment (%-Bulls in
selected Rydex/Guggenheim Funds) is once again reaching levels that were seen
during the dot.com bubble (based on standard deviation analysis). It’s been this
high at times in January thru April of this year so this isn’t an immediate
sign of impending doom. Further, sentiment isn’t good for
timing since it can remain elevated for an extended period. It does set the
stage for possible trouble should we see deterioration elsewhere in the economy
or in the stock market.
My overall position hasn’t changed much: 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 for the 3rd day in a row and
the 6th in the last 7-days; but Healthcare (XLV) almost equaled IBB.
Either would be OK at this point. I want to see stronger signals before I
commit more money to the markets. I thought this might be a reflex rally due to
Congress’ failed healthcare revision – it may be, but perhaps healthcare and biotech
are the the next hot sectors.
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
MONDAY 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
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.)
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.
