“New orders for U.S.-made goods recorded their biggest
drop in nearly three years in July, but demand for capital goods was stronger
than previously reported, pointing to a faster pace of business spending early
in the third quarter…Factory goods orders tumbled 3.3 percent amid a slump in
demand for transportation equipment…” Story at…
BIG 4 ECONOMIC INDICATORS (Advisor Perspectives)
“There is…a general belief that there are four big
indicators that the committee [National Bureau of
Economic Research] weighs heavily in their cycle identification process
[for recession identification]. They are: Nonfarm Employment; Industrial
Production; Real Retail Sales; Real Personal Income (excluding Transfer
Receipts)”
Charts and analysis at…
My cmt: No recession here. Conditions are not falling.
SEE THE “RULE OF TWENTY” (Real Investment Advice)
“In the end, it does not matter IF you are
‘bullish’ or ‘bearish.’ The reality is that both ‘bulls’ and
‘bears’ are owned by the ‘broken clock’ syndrome during the
full-market cycle. However, what is grossly important in
achieving long-term investment success is not necessarily being
‘right’ during the first half of the cycle, but by not being ‘wrong’
during the second half. Will valuations currently pushing the 3rd highest level
in history, it is only a function of time before the second-half of the
full-market cycle ensues. That is not a prediction of a crash. It is just a
fact.” - Byron Wien, vice chairman of Blackstone Advisory Partners.” Commentary
at… “The Rule of 20”…
The piece notes the rule of 20 says that the PE of stocks
+ Inflation should not exceed 20. By that measure markets are “fully priced”
according to Mr. Wein. We might also note that using the Rule of 20 the market
is currently at its third highest level in history, exceeded only by years 1929
and 2000.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 0.8% to 2458.
-VIX leaped about 20% to 12.23.
-The yield on the 10-year Treasury fell to 2.060%. (Both
bond and option Boys were worried today; but it still could have been just
profit taking.)
I wrote Friday that profit taking would not be a surprise
and I think that’s what we got today. The S&P 500 closed at its
50-dMA. It’s a good sign that we didn’t
have a lower close. Price-Volume improved when compared to prior recent lows (below
the 50-dMA) and internals were somewhat
improved.
Market Internals remain bullish; the old standby
advance-decline ratio remains “overbought”; another similar measure, the 10-dMA
of the % of stocks advancing on the NYSE, slipped to 57.4%.
The sum of 17-indicators was unchanged today, but the
10-day value shows a vastly brighter view of the markets. It indicates the markets
have improved a lot in the last 10-days.
Late-day action was up today, but the general direction
remains down on a longer-term basis.
Overall the short-term indicators remain bullish today. The
day was a statistically significant (big) down-day exceeding my statistical
parameters and that is followed by an up-day the next day about 60% of the time.
The bottom line is that today's action was not a particularly bad sign; we just don’t want another close below the 50-dMA as that may suggest more selling ahead.
The 50-dMA is now 2453.
Longer-term, I’m cautiously bullish; I will worry more 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…
Biotechnology (IBB) remained #1 today. Avoid XLE; its 120-day
moving average is falling.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
I haven’t been doing much trading recently. I do own SSO
(2xS&P 500 ETF) that I established last Wednesday (23 July). My trading has
been so bad recently that I didn’t want to encourage anyone to follow my
example so I didn’t post it here.
-“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 Positive 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, Sentiment, VIX & Volume indicators
were neutral. With VIX recently below 10 for a couple of days (May, June, July
and 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.
