“…when we see volume drop in XIV, that is a sign of
investor complacency, and it usually marks a meaningful top for the stock market.”
– Tom McClellan. Commentary at…
FED GREATEST ACHIEVEMENT – INFLATION (Felder Report)
“The Fed was created in 1913 in response to the Panic of 1907. Its
original mandate was to promote the sort of financial stability that would
prevent or at least ameliorate this kind of banking crisis. 100 years later
they’ve clearly made very little if any progress on this front.” – Jesse
Felder, Felder Investment research.
JOHN HUSSMAN CMMENTARY EXCERPT (Hussman Funds)
“I fully expect the completion of the current market
cycle to wipe out the entire total return of the S&P 500, in excess of
Treasury bill returns, all the way back to 2000, and more likely to
roughly October
1997 (and that’s assuming that valuations don’t even breach
historical norms). We’ve certainly drawn useful lessons from the recent
half-cycle, but whether the market moves higher or lower in the near term, I
doubt that value-conscious investors will lament having been “too early” [to
take defensive measures] by the time this cycle is completed.” – John Hussman,
PhD. Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was down about 0.2% to 2497.
-VIX rose about 6% to 10.21.
-The yield on the 10-year Treasury dropped to 2.222%.
VIX below 10 is an extreme low number and that is a Bear
sign. The catch is that a move down could be months (or more) in the future. See
my comment regarding VIX under the paragraph MARKET REPORT / ANALYSIS at…
In addition to the extreme low VIX, I have a
“calm-before-the-storm” indicator that has been flashing red for more than a
week. It is a statistical indicator that
looks at how much the S&P 500 varies on a daily basis and calculates a
standard deviation of the moves. If the
variation falls to low levels, it usually signals trouble for the markets. The
last time it was this low there wasn’t much of a slide – the market pulled back
about 2%, so it’s hardly worth mentioning. In April there was another small
move down after this this indicator signaled bearish.
Previously (going back a few years) this was a very
tradable indicator that presaged fairly big moves in VIX and could be traded in
VXX. Now I will have to see a lot more
negative signs before I’d attempt a trade.
It is really just another sign of too much complacency in the markets.
My sum of 17 indicators fell from +8 Friday to Neutral on
the day. Longer term, the smoothed version of this indicator is also falling
slightly. Interestingly, today, up-volume exceeded down volume; advancers
exceeded decliners; and the number of stocks on the NYSE that made new 52-week new
highs was 10-times the number of 52-week new-lows. In short, one must wonder
why the S&P 500 went down today. The major indexes usually follow the
majority so Tuesday should be an up day.
I’m cautiously bullish Longer-term; 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. 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
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals
switched to 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
Monday, Price, 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.
