Wednesday, August 9, 2017
Productivity … Crude Inventories …… Stock Market Analysis … ETF Trading
PRODUCTIVITY (ABC News)
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 productivity of American workers rose just modestly in the spring, extending a worrisome issue that has persisted throughout this expansion. Productivity grew at an annual rate of 0.9 percent in the April-June quarter, slightly better than a scant 0.1 percent rate of increase in the first quarter…” Story at…
CRUDE INVENTORIES (Oil Price.com)
“The decline in U.S. comparative inventories since February is the most significant oil market development since prices collapsed three years ago. It means that U.S. demand has exceeded supply for most of the last 5 months. The main cause is lower net imports, not higher domestic consumption, and that is probably not sustainable.” Story at….
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 1pt to 2474.
-VIX was up about 1% to 11.11.
-The yield on the 10-year Treasury slipped to 2.251%.
I wrote yesterday that the dip buyers might move in Wednesday; did they ever! The S&P 500 went straight up from about 2:30 on to the close. So far though, there has been a slow and steady decline in market internals and the indicators I track, at least in the short-term as follows:
-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 still getting more bearish each day.
-The 10-day measure of advancing stocks was 46.7% indicating that less than 50% of stocks on the NYSE have been advancing over the last 10-days. That’s another bearish sign.
-Advancing volume is falling too and on a 10-day basis only 45% of the volume has been advancing.
I think at this point we have to get Bearish in the short-term.
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. 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) remained #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 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
WEDNESDAY 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
Wednesday, Price is 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.