NAHB HOUSING INDEX (Builder online)
“Builder confidence in the market for newly-built
single-family homes fell three points to 64 in September, down from August’s
revised reading of 67 on the NAHB/Wells FargoHousing
Market Index (HMI), the NAHB reported Monday. “The recent hurricanes have
intensified our members’ concerns about the availability of labor and the cost
of building materials,” said NAHB Chairman Granger MacDonald.” Story at…
RECESSION? – HMMMM: THE BIG FOUR (Advisor Perspectives)
“There is…a general belief that there are four big
indicators that the [NBER] committee weighs heavily in their [recession] cycle
identification process. They are:
Nonfarm Employment; Industrial Production; Real Retail
Sales; and Real Personal Income (excluding Transfer Receipts)” (The following
chart is an updated composite of the “Big Four” indicators from dShort.com.)
My cmt: Industrial Production and Retail Sales have
pulled the Big Four numbers down recently, but it’s too early to worry about
recession.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.2% to 2506.
-VIX was down about 0.2% to 10.15.
-The yield on the 10-year Treasury dipped slightly to
2.200%.
Sentiment (measured as %-Bulls from funds invested in
selected Rydex/Guggenheim funds) has fallen from 82% last week down to 67%
Monday (on a 5-day basis). Sentiment usually peaks after a top as the dip-buyers move in. With sentiment falling, it usually brings in
the contrary investors who can drive the Index higher. In summary, the falling
sentiment appears bullish.
The sum of 17-indicators rose from +1 to +5 today and
longer term numbers are still bullish. The worry is that they appear to be
topping and the trend in indicators is usually more important than whether
indicators are Bullish or Bearish.
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,
but it appears to be stalling out.
Industrial cyclicals (XLI-ETF) is outperforming the
S&P 500 and that is usually a bullish indicator. If investors are worried,
cyclical stocks are usually the first to go. Along a similar line, utilities
(XLU) were today’s worst performer in the ETFs I track. XLU had been
underperforming the S&P 500 so the move is bullish.
RSI is close to oversold as is the Bollinger Band
indicator - leans Bearish.
Overall the short-term indicators are Bullish Friday, but
there are some cracks beginning to show.
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
-“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
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
to 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
Monday, Price was
positive. 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) 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.
