Friday, August 4, 2017
Payrolls … AVG Hourly earnings … Stock Market Analysis … ETF Trading
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.
“The U.S. dollar and bond yields climbed while stocks on Wall St rose modestly on Friday, following a stronger-than-expected U.S. jobs report, which also showed a pick up in wage growth for the world's largest economy. The U.S. Labor Department said nonfarm payrolls rose by 209,000 jobs last month.” Story at…
AVG HOURLY EARNINGS (Reuters)
“Average hourly earnings increased nine cents, or 0.3 percent, in July after rising 0.2 percent in June. That was the biggest rise in five months. On a year-on-year basis, wages increased 2.5 percent for the fourth straight month.” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.2% to 2477.
-VIX was slipped about 4% to 10.03.
-The yield on the 10-year Treasury rose to 2.264%.
See yesterday’s Blog if you’d like more detail. For now…
The sum of my 17-Indicators is still falling sharply on a smoothed long-term basis and has dropped into negative territory so the indicators I track are getting more bearish each day.
I think at this point we have to get Bearish in the short-term; but internals improved Friday so I may have to cover my relatively small VXX position soon.
Longer-term, I’m cautiously bullish; I will worry more in late-summer (we’re almost there) and into early fall, but I remain fully invested. There isn’t any news now that signals a bear market and long-term indicators remain neutral. A short-term pullback seems more likely now.
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, Aerospace and Defense (ITA) was #1. Avoid XLE; its 120-day moving average is still 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.
I haven’t been doing much in the trading portfolio, but I did take a short-term flyer on VXX, betting the VIX will rise soon. This is high risk and I lost money the last time I tried this trade. With VIX near all-time lows, the bet is a better risk now; but this trade violates the advice below – so watch out!...small position with tight stops. If there is a big jump higher in the VIX, forget it – we’re too late.
-“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 switched to Neutral on the market, but remained close to a sell signal.
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 is positive (perhaps too positive); Sentiment, Volume, & VIX indicators were neutral. (With VIX recently below 10 for a couple of days (May and June, and now July), 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.