RETAIL SALES (FoxBusiness)
“Spending at U.S. retailers fell in August with consumers
buying fewer goods at home-improvement stores, car dealerships and online…Sales
earlier in the summer were less robust that previously estimated.” Story at…
August retail sales dropped 0.2% from July.
EMPIRE MANUFACTURING (Rochester Business Journal)
“The general business conditions index held steady at
24.4, while the new orders index rose four points to 24.9 and the shipments
index climbed four points to 16.2.” Story at…
INDUSTRIAL PRODUCTION (CNBC/Reuters)
“U.S. industrial output fell in August for the first time
since January as Hurricane Harvey battered oil, gas and chemical plants along
the Gulf Coast and a cool summer sapped utility demand in the east, the Federal
Reserve said on Friday. Overall industrial production fell 0.9 percent over the
month…” Story at…
MICHIGAN SENTIMENT (MarketWatch)
“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…
EVERYONES’S IN THE POOL (Real Investment Advice)
“The markets are indeed in a liquidity-driven up cycle
currently. With margin debt near peaks, stock prices in a near vertical
rise and “junk bond yields” near record lows, the bullish media
continues to suggest there is no reason for concern. The support of liquidity
is being extracted by the Federal Reserve as they simultaneously tighten
monetary policy by raising interest rates. Those combined actions, combined
with excessive exuberance and risk taking, have NEVER been good for investors over
the long term. At market peaks – “everyone’s in the pool.” – Lance Roberts.
Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.3% to 2500+. (A new
high at a big round number.)
-VIX was down about 3% to 10.17.
-The yield on the 10-year Treasury rose to 2.203%.
One of the issues discussed on the Lance Roberts
commentary I linked above was that investors have been piling into Equity funds
over the last year or so and this is a concern for the markets. If everyone is “all-in” who is left to
buy? That’s a reasonable question. When I consider it, it seems to me that if a stampede
into stocks is underway then we should see a corresponding increase in the
price of stocks - you know, the old supply and demand thing.
Stocks have
made all-time highs and stocks do appear
over priced by a number of measures, but there’s more to it. Let’s consider an important missing
ingredient; the S&P 500 is only about 1% above its 50-day moving average
(50-dMA). More telling, the Index is only about 5% above its 200-dMA. If we were
in the midst of a parabolic rise before an impending top we’d see the S&P
500 as high as 15%, or perhaps even 20%, above its 200-d MA. Absent that, we
don’t seem near a major top unless we have a news-driven event or the FED
pushes the market down with unexpected tightening.
As always, we could see a correction anytime; in fact,
we’re overdue. This has been one of the longest stretches without a 5%-10%
correction in many years.
The sum of 17-indicators dipped slightly today, as it did
Thursday, but over-all the 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.
Overall the short-term indicators are sliding toward neutral Friday.
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
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
to Neutral on the market as new-high/new-low numbers slipped.
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
Friday, 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.
