“In a widely expected move, the Federal Reserve
kept interest rates unchanged on Wednesday and announced a
timeline for reducing its $4.5 trillion balance sheet.
After its two-day policy meeting, the Federal Open Market
Committee unanimously voted to hold the federal funds rate between 1.00% and
1.25% and begin the process of shrinking its balance sheet by October.” Story
at…
EXISTING HOME SALES (Reuters)
“U.S. home resales fell to their lowest in a year in
August as Hurricane Harvey depressed activity in Houston and a perennial
shortage of properties on the market sidelined buyers. The National Association
of Realtors said on Wednesday
existing home sales decreased 1.7 percent…” Story at…
CRUDE INVENTORIES (OilPrice.com)
“Amid restarting refineries along the Gulf Coast and
growing optimism about strengthening demand, the EIA dampened spirits somewhat
by reporting a
substantial increase in crude oil inventories for the week to September 15.”
Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.1% to 2508.
-VIX slipped about 4% to 9.78.
-The yield on the 10-year Treasury rose to 2.271%.
VIX is again below 10. This is extraordinary number that
occurs rarely. In short, complacency abounds.
We have seen closes below 10 on the VIX for the past 5
months (May, June, July, August, and now September). The last time VIX dropped
below 10 (other than the past 5-months) was in January 2007 and the markets
crashed 6-months later. My take is that
the closes below 10 in November 2006 thru January of 2007 foretold of massive
complacency that set the stage for the crash that followed. We have now seen a
number of VIX closes below 10 in May thru September 2017. VIX at this level is
an important sign that a decent correction (or worse) is coming. We just don’t
know when. From here, we should be
very wary and pay close attention to the markets.
Market Internals remain in pretty good shape. Advancing
volume is still headed up and the Smart Money remains bullish. (This reflects
late day action and that is considered to be an indication of what the Pros are
doing.) New-high/new-low data still looks good.
RSI is close to oversold as is the Bollinger Band
indicator, but neither are currently in sell mode so let’s call these neutral.
Overall the short-term indicators are Bullish Tuesday,
even with some cracks showing.
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…
Aerospace and Defense (ITA) remained #1 today.
Biotechnology (IBB) slipped to #3. My plan was to get out of IBB, but I was
busy and didn’t sell Wednesday. IBB was up Wednesday so I lucked out. I plan to get out Thursday.
Avoid XLE; its 120-day moving average is 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 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
Wednesday, Price
was positive. Sentiment, VIX & Volume indicators were neutral. With VIX
recently below 10 for a couple of days (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.
