“The producer price index jumped 0.4% in September…Most
of the increase in wholesale prices last month was tied to a runup in gasoline
prices after Hurricane Harvey knocked several major oil refineries off line.”
Story at…
UNEMPLOYMENT CLAIMS (MarketWatch)
“Initial weekly jobless claims fell by 15,000 to 243,000
in early October to mark the lowest level in six weeks.” Story at…
CRUDE INVENTORIES (24/7Wallst)
“The U.S. Energy Information Administration (EIA)
released its weekly petroleum status report Thursday morning, showing that U.S.
commercial crude inventories decreased by 2.8 million barrels last week,
maintaining a total U.S. commercial crude inventory of 462.2 million barrels.”
Story at…
My cmt: Crude prices firmed on the news.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was DOWN about 0.2% to 2551.
-VIX rose about 1% to 9.91.
-The yield on the 10-year Treasury slipped to 2.321%.
My sum of 17-Indicators remains bullish on a smoothed long-term.
Today it rose from +2 to +3. Price has
been up and down recently as investors take a break. Internals generally still
look pretty good, still a correction is always possible.
As I’ve been saying for a while, I think that before we
see any meaningful pullback, we need to put in a top. At this point another big move up, say around
1%, could mark another short-term top, especially since RSI and Bollinger Bands
are warning of trouble. From there a retreat of some kind, probably in the 3-5%
range, is probable. There’s no guarantee that there will be a big move that
signals a short-term top, but it is fairly common.
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 almost 9% in the 2months I’ve owned
it.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
As I been saying for a while, 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
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
THURSDAY 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
Thursday, 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.
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.
