“U.S. consumer sentiment improved to its strongest level
in seven months in early August, reflecting confidence in the outlook for the
economy and in personal finances as the U.S. stock market holds near record
highs, a key survey showed on Friday. The University of Michigan's consumer
sentiment index rose to 97.6 in the first half of August…” Story at
HINDENBURG OMEN – FAKE NEWS (MarketWatch)
“Even as the S&P 500 SPX, -1.54% and the Dow Jones
Industrial Average DJIA, -1.24% rose Wednesday, there were
more stocks hitting 52-week lows than 52-week highs on the New York Stock
Exchange — something the market hasn’t seen since July 2015, according to Jason
Goepfert, president of Sundial Capital Research,
And this divergence has triggered a Hindenburg Omen on
the S&P 500 for five out of the last six sessions.” – MarketWatch.
Hmmmmmmm. Perhaps this is more Fake News. My version of the Hindenburg omen (it’s very
close to the real version) requires the 10-dEMA of the Fosbeck Hi/Lo Index to
exceed 30 along with new-lows twice new-highs and the McClellan Oscillator
below zero. My analysis shows the S&P 500 is not close to a Hindenburg
Signal. Further the article noted that we now have “…more stocks hitting
52-week lows than 52-week highs on the New York Stock Exchange — something the
market hasn’t seen since July 2015…” Sorry, but this has happened a lot since
2015. It’s happened 16-times this year alone. Fake news at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.2% to 2426.
-VIX dropped 8% to 14.26.
-The yield on the 10-year Treasury was up slightly to
2.196%.
There was High volume on the NYSE early in the day as the
market exhibited weakness before a strong recovery to mid-day. In the afternoon
the S&P 500 slipped all day and then fell hard with a late-day swoon that
turned an otherwise positive day to negative. The weak close is worrisome, but
there was a positive closing Tick (sum of last trades of the day) and that’s a
bit encouraging. Overall volume on the day was low, almost 20% below the
monthly average so we can’t get too worried.
VIX dropped more than 8% on the day and that’s an
indication that the options boys are less worried and that’s bullish for stocks.
So far the S&P 500 is 2.2% below its all-time high.
Bollinger Bands are still indicating “oversold”.
RSI (14-day, SMA) was 34, very close to an oversold reading.
My sum of 17-indicators slipped on the day; on a smoothed
basis it has slowed its decline and that may suggest a turn upward soon.
The late-day action indicator dropped again following today’s
weak close. The Pros aren’t buying yet.
The indicators have been hinting at a bottom, but maybe
it’s just wishful thinking on my part. New-High/new-low
is still showing a lot of weakness and these numbers need to turnaround if
there is going to be a bottom.
Selling may continue Monday as investors worry about the
recent weakness over the weekend. That could set up a “turn-around-Tuesday”
with a move up on Tuesday. If we don’t see a turn up Monday or Tuesday, it will
be time to get concerned about a more robust correction.
Longer-term, I’m cautiously bullish; I will worry more if
the numbers continue to 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…
Once again, Aerospace and Defense (ITA) remained #1. Avoid
XLE, DVY and IWM; their 120-day moving averages are falling.
The weakness
across several sectors is a concern so we need to keep a watchful eye on this
market.
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. I haven’t been doing much recently; I don’t have time to watch
and I think short-term trading takes a watchful eye.
-“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
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained negative 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
Friday, Price,
Sentiment & Volume indicators were neutral. VIX was indicating negative,
but 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.
