CHICAGO FED NATIONAL ACTIVITY INDEX (Chicago Fed)
“Led by improvements in production-related indicators,
the Chicago Fed National Activity Index (CFNAI) moved up to +0.17 in September
from –0.37 in August. All four broad categories of indicators that make up the
index increased from August, and three of the four categories made positive
contributions to the index in September. The index’s three-month moving
average, CFNAI-MA3, was unchanged at –0.16 in September.” Press release
available at…
“Index points to a pick-up in economic Growth in
September” so says the FED.
LIBERAL STUDENTS LOVED TRUMP’S TAX PLAN…WHEN TOLD IT WAS
BERNIES (Mish Talk)
“-Campus Reform interviewed college students seeking
their opinion on several features of Bernie Sanders' tax plan. They loved it.
Interestingly the plan was not Bernie's but rather Trump's.
-In anticipation of the 100-day mark of Donald Trump's
presidency, Campus Reform asked students at George Mason University to evaluate
some of the president's accomplishments…
-The students predictably blasted things like the
"Apology Tour" and stimulus package, even comparing them to Nazi
policies, at least until learning that they were actually accomplished during
President Obama's first 100 days.”
Watch the videos at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was down about 0.4% to 2565.
-VIX jumped up about 11% to 11.07.
-The yield on the 10-year Treasury slipped to 2.368%.
The sum of my 17-indicators dropped from +3 to 0 and that’s
a neutral indication. Advancing volume actually switched to positive Friday
after falling for a month.
Late day action is Bearish since it is falling over time.
Today was a statistically significant down-day and that
results in an up-day the next day (Tuesday) about 60% of the time. Friday was a
statistically significant up-day. I didn’t
pay much attention because these moves are VERY low. If the bouncing up
and down continues it would suggest a topping action. Now, it’s too early to guess how this may go.
We may see some buy-the-dip traders move in soon…or not...we’ll see.
The markets are still leaning toward some sort of drift
down. Short-term we appear to be due for about a 3-5% dip. Short-term I am leaning bearish, but I remain
bullish longer-term. One wonders when this party will end so I will worry if
the numbers deteriorate, but for now I remain fully invested.
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.
I thought it would be interesting to apply the ETF
ranking system to the Dow 30. The quick
way to do it was to keep the number of stocks the same as my ETF ranking system
so here is a ranking of 15 DOW stocks.
TODAY’S RANKING OF 15 DOW STOCKS (Ranked Daily)
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF. Avoid GE and Disney. Their 120-day moving
averages are falling.
Boeing (BA) is currently number one on a momentum basis.
*I rank it similar to the ETF ranking system methodology. For more
details, see NTSM Page at…
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
Repeating again…and again… and again…
It is tempting to make a VXX trade if and when we get a
big move up signaling a short-term top.
VIX is at extreme lows. VXX would be a bet against the market and higher
VIX – essentially a short. This is a
risky trade since as VIX options expire, they must be replaced with more
expensive options (referred to as contango).
For this reason, VXX will lose value even if VIX stays the same. I need
a really good set-up before I’ll trade VXX or short. Perhaps we’ve missed the
opportunity, because the signal wasn’t very strong Friday. I need stronger signals.
My shorting rule is as follows:
-“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
remained 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, the Price
indicator was positive; Sentiment, VIX & Volume indicators were neutral.
With VIX recently below 10 for a couple of days in May, June, July, August,
September and now October, 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.
