RETAIL SALES (USA Today)
“Consumers went out shopping in a big way in July,
pushing up retail sales by the largest amount in seven months. Retail sales
advanced 0.6% last month…” Story at…
EMPIRE MANUFACTURING (MarketWatch))
“A gauge of New York-area manufacturing skyrocketed to a
three-year high in August, according to a report released Tuesday. The New York
Fed’s Empire State manufacturing index surged 15 points to 25.2…” Story at…
S&P HEADING FOR A TREACHEROUS PULLBACK (MarketWatch)
“…I
believe the higher probability target is the 2380-2400 region on the SPX to be
struck within the month of August, with my preference being later this month,
while recognizing it can happen as early as this week. Remember, there is only
so much micro-guidance I can reasonably provide within a fourth-wave structure…But
I want you all to remain focused on the higher probability that this is only a
multi-month pullback, which was quite expected by us, and the pattern which
called for this pullback to occur at this time also suggests that the market is
setting up a rally to 2600+ into 2018.” Story at…
My cmt: Perhaps,
but the new-highs may be the biggest clue.
If new-highs pick up substantially, the correction will be postponed
again.
WHAT TO DO NOW (MarketWatch)
“Reduce your equity allocation and put the money into
intermediate-term bonds or cash” Commentary at…
My cmt: Watch the new 52 week highs…
HUSSMAN COMMENTARY (Hussman Funds)
“In my view, the S&P 500 will likely complete the
current cycle at an index level that has only 3-digits. Indeed, a market
decline of -63% would presently be required to take the most historically
reliable valuation measures we identify to the same norms that they have
revisited or breached during the completion of nearly every market cycle in
history…Last week, both new highs and new lows on the NYSE exceeded 7% of total
issues traded. Over the past three decades, I’ve periodically described this
kind of internal dispersion as a negative consideration for the market (h/t
Norm Fosback), particularly when it is joined by lopsided bullish sentiment and
negative market internals across our own measures. While we don’t view this
divergent leadership as necessary or sufficient for either a market peak or
severe subsequent losses, it’s notable that the same set of features also
emerged near the 1973, 1987, 2000 and 2007 peaks.” – John Hussman, PhD.
My cmt: I follow some of Norm Fosback’s work in my
system. Oddly, none of the Fosback
indicators for dispersion that I follow got any more than slightly Bearish.
A BEAR MARKET ANYTIME NOW (MarketWatch)
Commentary at…
My cmt: Ok…everyone thinks a bear market is coming; that
probably means that it isn’t…yet.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about a point to 2465.
-VIX was down about 2% to 12.04.
-The yield on the 10-year Treasury rose to 2.276%.
Today the S&P 500 chart looks pretty good. The Index bounced from its 50-dMA and charts
appear reasonably bullish. On the other
hand, the market internals have not turned up and my sum of 17-indicators has
continued down. Late day action (the so called smart money) is headed down on a
10-day basis so the Pros may be getting cautious too. Utilities are outperforming the S&P 500
over the last 10-days and that is currently slightly bearish. Bottom line: We are not out of the woods
yet. New-high/new-low data got worse
today. As previously noted, unless new-highs improve, the market is headed for
more trouble. I’ll be watching Tuesday and afterward.
I suspect that the S&P 500 is within 1 or 2% of a
short term bottom and perhaps the bottom was last Thursday. If the new-highs
can pick up we’ll be able to breathe easier in the short-term. In the absence of better internals this
week, it will be time to admit that a correction may be here.
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…
Today, Aerospace and Defense (ITA) remained #1. Avoid XLE
and IWM; their 120-day moving averages are 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
TUESDAY 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
Tuesday, Price was positive. Sentiment & Volume
indicators were neutral. VIX was indicating neutral, 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.
