“Orders for long-lasting manufactured goods rose 2.2% in
September, the biggest gain in three months, led by a big increase in orders
for commercial aircraft.” Story at…
HOME SALES (Reuters)
“Sales of new U.S. single-family homes unexpectedly rose
in September, hitting their highest level in nearly 10 years…” Story at…
CRUDE INVENTORIES (24/7WallSt)
“The U.S. Energy Information Administration (EIA)
released its weekly petroleum status report Wednesday morning, showing that
U.S. commercial crude inventories increased by 900,000 barrels last week,
maintaining a total U.S. commercial crude inventory of 457.3 million barrels.”
Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 0.5% to 2557.
-VIX was up about 0.6% to 11.23.
-The yield on the 10-year Treasury increased to 2.436%.
(Back in March the yield hit 2.6%. The rising rates are troubling some investors;
higher rates may pull some out of the stock market.)
My Sum of 17-Indicators slipped to -2 from +2 Tuesday.
Looking at some indicators:
Bearish:
-My Money Trend Indicator slipped below zero. That’s a smoothed 10-day value so it
demonstrates some behind the scenes weakness.
-The 10-day moving average (d-MA) of stocks advancing on
the NYSE dropped to 48.2% indicating less than half of stocks on the NYSE have
been advancing over the last 10-days.
-Comparing the Cyclical Industrials (XLI-ETF) to the
S&P 500 shows cyclicals are being sold relative to the Index. This is bearish.
-New-high/new-low data is falling over on a 10-dMA basis,
but longer term it is still creeping higher. The longer term will be more
definitive, so for now we may consider this indicator to be neutral, but
leaning bearish.
-Bollinger Bands were overbought a month ago, signaling a
sell (then) because the Index exceeded 2-std deviations above the norm. Since then they have been stretched. Now
they’ve settled into a neutral indication along with RSI. Still, they warned at
the recent top 3-days ago.
On the Bullish side:
-The Smart Money Indicator (based on late day action)
turned positive today. Looks like the
Pros are starting to buy.
-The move Wednesday was statistically significant based
on the standard deviation of the price-volume when compared to recent history.
That is likely to result in an up-day tomorrow.
It is looking more like we may see a short-term dip in
the 3-5% range. Earnings will play a part in investor psychology. Google,
Amazon, Intel all report tomorrow albeit after the close, so they’ll set the
tone for Friday.
Short-term I am now leaning bearish (make up your mind!) 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 methodology 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 ETF 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) slipped to #2 and Caterpillar (CAT) moved
into #1 based on its strong earnings yesterday. (It was up around 5%
yesterday.) CAT is currently number one on a momentum basis. Boeing slipped 3% on
its earnings today. BA is up around 72%
this year so there is going to be profit taking.
*I rank it similarly to the ETF ranking system. Or more
details, see NTSM Page at…
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
We didn’t get a good signal on the Top. Looks like I’ve
missed the opportunity to short (or buy the VIX) because the signal wasn’t very
strong Friday.
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
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
to Negative 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, Sentiment,
Price, 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.
The previous signal was a BUY on 2 June and the last
actionable signal was a BUY (from a prior sell) on 15 November 2016.
