Tuesday, July 11, 2017

Job Openings (JOLTS) … Death of Keynes? … Market Analysis … Trading ETFs and ETF Ranking

JOLTS (Marketwatch)
“The number of job openings in the U.S. fell sharply in May as companies hired the most people since 2004. Job openings fell by 301,000 in May to 5.66 million, just one month after reaching the second highest level ever, according to the government’s job openings and labor turnover survey…” Story at…
DEATH OF KEYNES? (Real Investment Advice)
“Keynesian economics states that government policies could be used to increase aggregate demand, thus increasing economic activity and reducing unemployment and deflation…Unfortunately, as shown below, monetary interventions and the Keynesian economic theory of deficit spending has failed to produce a rising trend of economic growth.”
Chart and commentary from…
-Tuesday the S&P 500 was down about 1pt to 2426.
-VIX dropped about 2% to 10.89.
-The yield on the 10-year Treasury slipped to 2.354%.
No strong direction yet, so not much change. My comment today is “ditto yesterday”. I might point out that the 5-10-20 Timer system is still a sell since the 5-dEMA and the 10-dEMA are still lower than the 20-dEMA. On a positive note, new-highs seem to be turning a corner and are slightly higher so if this trend can continue we might see some new highs for the market, but it’s too early to say at this point.
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 US Aerospace and Defense (ITA) was #1, but Biotechnology (IBB) was close enough to consider it a tie. I'd hold IBB until there is a new clear leader.
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). 
Tuesday, 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.