“U.S. home resales unexpectedly increased in September as
the effects of Hurricanes Harvey and Irma began to dissipate, but a persistent
dearth of properties for sale continued to weigh on overall activity.
The National Association of Realtors said on Friday
existing home sales rose 0.7 percent…” Story at…
My cmt: They rose 0.7% over the previous month, but they
fell 1.5% year-over-year.
IT’S A DEPRESSION! (Real Investment Advice)
“Since the financial crisis of 2008, the annual increase
in Federal debt has dwarfed the annual growth in GDP. Without the enormous
increase in government borrowing and accompanying spending, averaging
approximately $1 trillion a year since 2008, GDP would have been negative for
the last nine years. The post-crisis trend marks a sharp departure from the
years prior – an unprecedented “Great Depression.”
It’s an interesting premise; I’d have to see more data to
be convinced.
RALLY & PATTERN BREAK ON THE STOCK MARKET (Financial
Sense)
“Normally, we would look for a strong market rally to
begin now and carry into late November or early December. However, with so much
buying power used up before the earnings onslaught, we suspect that momentum will
be waning as we move into November. Correction risk may be minimal until
we get past the earnings release climax around the 2nd week of November.”
Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.5% to 2575.
-VIX dipped about 0.8% to 9.97.
-The yield on the 10-year Treasury rose to 2.383%.
Weakness Gone?
Wow. All we needed was the Senate to pass the 2018 federal
budget. Who knew? (The Federal 2018 Fiscal Year started 1 Oct 2017 so it’s about
time they passed a budget!) Futures jumped up last night when the Senate vote
was held.
On the day: 61% of stocks on the NYSE were advancing; 62%
of volume was Advancing volume; and new highs jumped from 111 to 256. Today, Market
Internals improved, but remained Neutral overall. Cyclical Industrial stocks
jumped up more than 1%; Utilities were today’s worst performers and those are
bullish signs. Closing tick (reflecting final trades) was again a very bullish
over 500 number at +532. Again there
were a lot of “buy-at-the-close” orders.
The sum of my 17-indicators was up from -1 to +3 so indicators
swung bullish, but not by much.
Overall it looks like a pullback may have been postponed
a bit, but it isn’t gone by any means. There
are Bearish signs remaining:
-Over the last 2-weeks there have been only 4 down days
on the S&P 500. That level of bullishness is a bearish sign.
-RSI was 83, definitely in the overbought region, but the
S&P 500 remains below the upper Bollinger Band. That’s a stretched, but
neutral reading. Since I like to look at RSI and Bollinger Bands together, it
seems possible that the Index may climb a bit higher, but not too much.
Overall
The markets are still leaning toward some sort of drift
down. Short-term we appear to be due for about a 3-5% dip, but that may have
been postponed.
Historically, a “correction” is due in 2018 since that is
the second term of the new President at least if you believe in seasonality
predictions. 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.
My trade in ITA is up about 4% in the month I’ve owned
it.
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. I am not there yet.
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
FRIDAY 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
Friday, 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.
