Saturday, July 15, 2017

Retail Sales … CPI … Industrial Production ... Michigan Sentiment … Market Analysis … Trading ETFs and ETF Ranking

“Americans curtailed their shopping in June, with less spending at restaurants, department stores and gasoline stations. The spending pullback came despite a healthy job market and suggests that economic growth may remain sluggish.
Retail sales fell 0.2% after declining 0.1% in May…” Story at…
“U.S. consumer prices were unchanged in June as the cost of gasoline and mobile phone services declined further, pointing to benign inflation that could cast doubts on the Federal Reserve's ability to increase interest rates for a third time this year.” Story at…
“Industrial production rose for a fifth month in June, helped by the recovering oil and gas sector, according to data released Friday. Industrial production rose 0.4% in June…” Story at…
“Weaker expectations about personal finances helped drive U.S. consumer optimism this month to the lowest level since October, University of Michigan preliminary survey data showed Friday.” Story at…
-Friday the S&P 500 was up about 0.5% to 2459. (Another new-high.)
-VIX dropped about 4% to 9.51. (Another amazing low VIX number.)
-The yield on the 10-year Treasury dropped to 2.333%.
Advancing volume finally turned the corner Friday and headed up on a smoothed 10-day basis.
VIX has once again was below 10. That is a very rare event that I have written about before here, under CORRECTION COMING and MARKET ANALYSIS…
The S&P 500 is getting sold late in the day on a regular basis.  It seems that traders don’t want to hold overnight.  It suggests they are worried, but so far no one has blinked and the markets keep advancing.
Bollinger Bands are “overbought”, but they are close together so this isn’t indicating a large drop. The Advance Decline Ratio is also “overbought” – this is a less reliable indicator. I think RSI would need to confirm these overbought readings and that has not happened yet.
The S&P 500 managed to slip less than 2% - not much of a pullback. So, pullback postponed.
It looks like the call is long on a short-term basis. 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) was #1.
I would avoid XLE; its 120-day moving average is 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.
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 switched to Positive 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). 
Friday, Sentiment, 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.