Friday, September 29, 2017

Personal Income … PCE Prices … Chicago PMI … Michigan Sentiment … Stock Market Analysis … ETF Trading

PERSONAL INCOME (Nasdaq.com/RTTNews)
“U.S. personal income and spending both rose in line with economist estimates in the month of August, according to a report released by the Commerce Department on Friday. The Commerce Department said personal income edged up by 0.2 percent in August…” Story at… 
http://www.nasdaq.com/article/us-personal-income-and-spending-rise-in-line-with-estimates-in-august-20170929-00509

PCE PRICES (Reuters)
“U.S. consumer spending barely rose in August likely as Hurricane Harvey weighed on auto sales, while annual inflation increased at its slowest pace in nearly two years, pointing to a moderation in economic growth in the third quarter.” Story at…
My cmt: No inflation here.  Perhaps the Fed WILL change course and slow their rate of rate hikes…or reverse direction and lower them??!!

CHCAGO PMI (Marketwatch)
“The Chicago purchasing managers index rose to 65.2 in September from 58.9 in August, on a scale where any reading above 50 indicates improving conditions. That’s the highest level in three months and close to June’s reading of 65.7, the highest level since 2011.”

 MICHIGAN SENTIMENT
“Consumer sentiment fell slightly in September on concerns over the future, even as consumers assessed current conditions to be slightly better. The University of Michigan consumer-sentiment index fell to 95.3 from 96.8 in August.” Story at… 
http://www.marketwatch.com/story/consumer-sentiment-falls-slightly-in-september-amid-hurricane-concerns-2017-09-15

MARKET REPORT / ANALYSIS         
I am busy today so report this will be abbreviated. As of mid-afternoon, there are few changes from yesterday’s report.

RSI is no longer overbought, but the Bollinger Bands remain nearly overbought. I think the next big move up, say around 1%, could mark another short-term top. From there a retreat of some kind, probably in the 3-5% range, is probable.

I remain bullish longer-term. One wonders when this party will end so I will worry 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.

I’ll catch up on the Friday closing data later. Enjoy the weekend.

Thursday, September 28, 2017

GDP … Jobless Claims… Stock Market Analysis … ETF Trading

GDP (MarketWatch)
“The U.S. economy’s pace of growth in the second quarter was raised to 3.1% from 3% under the government’s latest revisions to gross domestic product.” Story at…
 
JOBLESS CLAIMS (FoxBusiness)
“The number of Americans applying for new unemployment benefits rose last week, at least partially reflecting job loss due to hurricanes Harvey and Irma. Initial jobless claims, which reflect nationwide layoffs, rose by 12,000 to a seasonally adjusted 272,000 in the week ended Sept. 23…” Story at…
 
MARKET REPORT / ANALYSIS         
-Thursday the S&P 500 was up about 0.1% to 2510.
-VIX slipped about 3% to 9.55.
-The yield on the 10-year Treasury slipped to 2.308%.
 
My sum of 17 indicators was up to +4 on the day from +3 yesterday. My smoothed version of the 10-day version of this indicator is still bullish. There are some bearish signs though.
 
RSI is overbought; the Bollinger Bands are nearly overbought; Money Trend has turned down; the old advance/decline ratio remains overbought. The extreme low VIX is a concern too. We could see some short-term slack or even a pullback of 3-5% start soon. Currently, my indicators are not very negative, so I'm not worried, but a correction is always possible.
 
I remain bullish longer-term. One wonders when this party will end so I will worry 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) remained #1 today. I am in ITA as of 21 Sept.
Avoid XLE; its 120-day moving average is still falling.
 
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
LONG
-“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 remained Neutral 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, the Price indicator was positive; Sentiment, VIX & Volume indicators were neutral. With VIX recently below 10 for a couple of days in May, June, July, August and September, 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) 24 March 2017 in my long-term accounts, based on short-term indicators. The 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.

Wednesday, September 27, 2017

FED May Slow Rate Hikes … Durable Goods Orders … Crude Inventories … Stock Market Analysis … ETF Trading

YELLEN SAYS FED MAY HAVE BEEN WRONG (CNBC)
“The Fed may have overstated the strength of the labor market and the rate of inflation, leading to monetary policy ahead that will be easier than thought, Fed Chair Janet Yellen said.” Story at…
 
ANOTHER STORY ON FED RATE HIKES (Investing.com)
“The Federal Reserve needs to continue gradual rate hikes despite broad uncertainty about the path of inflation, Fed Chair Janet Yellen said on Tuesday in remarks that acknowledged the central bank's struggles to forecast one of its key policy objectives. It is possible, Yellen said, that the Fed may have "misspecified" its models for inflation, and "misjudged" key facts like the underlying strength of the labor market and whether inflation expectations are as stable as they seem, and central bankers need to remain open to that possibility as they decide on policy.” Story at…
 
DURABLE GOODS (USA Today)
“Orders for long-lasting manufactured goods rose a modest 1.7% in August, reflecting a rebound in the volatile aircraft sector. A gauge of business investment was up for a second month, providing hope that a revival in manufacturing is gaining strength.” Story at…
 
CRUDE INVENTORIES (OilPrice.com)
“As WTI enjoys the first meaningful price rise since this spring, and a day after the API injected further optimism in markets by reporting a 761,000-barrel draw in U.S. crude oil inventories, the EIA added fuel to the celebratory mood. The authority reported a 1.8-million-barrel decline in U.S. commercial crude oil inventories for the week to September 22…” Story at…
 
MARKET REPORT / ANALYSIS         
-Wednesday the S&P 500 was up about 0.4% to 2507.
-VIX slipped about 3% to 9.87.
-The yield on the 10-year Treasury rose to 2.312%.
 
If the FED is slower in its rate hikes, it is time to view the stock market in a more favorable light. I have remained fully invested for some time so I don’t intend to increase stock allocations, but the fear that many have been exhibiting for some time may not be warranted.  The biggest threat to the stock market has been the Fed and rising rates.  We can also worry about Quantitative Tightening (QT), but if rate hikes are going to be slower than the Fed's previous promise to be slow, that fear is not warranted.
 
My sum of 17 indicators was up to +3 on the day from 0 yesterday. My smoothed version of the 10-day version of this indicator is still bullish.
 
I remain bullish longer-term. One wonders when this party will end so I will worry 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) remained #1 today. I am in ITA as of 21 Sept.
Avoid XLE; its 120-day moving average is still falling.
 
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
LONG
-“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 Neutral 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, the Price indicator was positive; Sentiment, VIX & Volume indicators were neutral. With VIX recently below 10 for a couple of days in May, June, July, August and September, 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) 24 March 2017 in my long-term accounts, based on short-term indicators. The 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.