Thursday, August 31, 2017

Jobless Claims … Personal Spending … Chicago PMI … Stock Market Analysis … ETF Trading

JOBLESS CLAIMS (MarketWatch)
“The number of people who applied for unemployment benefits in late August remained close to a postrecession low, pointing to another solid monthly employment report near the end of summer. Initial jobless claims in the period running from Aug. 20 to Aug. 26 rose by 1,000 to 236,000…” Story at…
 
PERSONAL SPENDING (24/7Wall St.)
“The U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) reported Thursday morning that personal income increased month over month by 0.4% in July, after remaining flat in June. Disposable personal income and personal consumption expenditures (PCE) both increased by 0.3%.” Story at…
 
CHICAGO PMI (MarketWatch)
“A gauge of Chicago-area economic activity held steady in August, after retreating from a 3-year high in the prior month. The Chicago PMI remained at 58.9…” Story at…
 
MARKET REPORT / ANALYSIS         
-Thursday the S&P 500 was up slightly about 0.6% to 2472.
-VIX dropped about 6% to 10.59.
-The yield on the 10-year Treasury dipped to 2.12%.
 
The sum of 17-indicators improved today both “on the day” and on a smoothed 10-day basis. Up-volume picked up today and is now positive on a 10-day basis. Advancing-volume was nearly triple declining volume while the number of advancing issues was well more than twice the declining issues. New-highs outpaced new-lows by a wide margin.
 
Traders were selling toward the close (based on late-day action), but (like yesterday) the closing tick was a very strong 479. That suggests there were a lot of buy-at-the-close orders. This is bullish for Friday.
 
Overall the short-term indicators are bullish today.
 
Longer-term, I’m cautiously bullish; I will worry more if the numbers deteriorate, but I remain fully invested. There isn’t any news now that signals a bear market and long-term indicators remain neutral.
 
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…
 
Aerospace and Defense (ITA) moved back into #1 today. SCHE (Emerging Markets) slipped into second place.
Avoid XLE and XLF; their 120-day moving averages are falling.
 
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
LONG
I haven’t been doing much trading recently. I do own SSO (2xS&P 500 ETF) that I established last Wednesday (23 July). My trading has been so bad recently that I didn’t want to encourage anyone to follow my example so I didn’t post it here.
-“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 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). 
 
LONG TERM INDICATOR
Thursday, Price, Sentiment, VIX & Volume indicators were neutral. With VIX recently below 10 for a couple of days (May, June, July and now August), 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.
 
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.