Tuesday, November 21, 2017

Existing Home Sales … Stock Market Analysis … ETF Trading … Dow 30 Ranking

EXISTING HOME SALES (Reuters)
“U.S. home sales increased more than expected in October as hurricane-related disruptions dissipated, but a chronic shortage of houses which is pushing prices beyond the reach of some first-time buyers remains an obstacle. The National Association of Realtors said on Tuesday that existing home sales rose 2.0 percent…last month.” Story at…
 
MARKET REPORT / ANALYSIS         
-Tuesday the S&P 500 was up about 0.7% to 2599.
-VIX was down about 9% to 9.73. (Just a reminder; VIX below 10 is an extreme low number indicating extreme complacency. The only time VIX has been below 10 in the past was about 6-months before major crashes. VIX doesn’t cause a crash – it just warns that unexpected news may bring a lot of selling as investors wake up to risk.)
-The yield on the 10-year Treasury rose to 2.356s%.
 
Up-Volume is now moving up on a 10-day basis and more than half of the volume on the NYSE has been up-volume over the last 10-days. The same is true for the number of advancing stocks – 52% have been up over the past 10-days. New-highs have jumped up and are easily outpacing new-lows on a daily basis.  This is all bullish suggesting the trend is up. 
 
My Indicators improved today and are improving on a longer-term basis.  The daily sum of 17-indicators was -9 four days ago and today it was +2. It improved again on a 10-day basis. Late-day action (the smart money) is now headed up over the last 2-weeks and that’s a bullish sign in the short-term. Utilities were up today, but were the worst of the ETFs I track except for Energy. That is a bullish sign too. Utilities are a safe-haven when the markets are in trouble.
 
I am bullish short-term because indicators are currently improving.  My guess is that it is not likely to continue too much longer; Sentiment is very close to the extreme readings that sometimes reverse the direction of the Index and the Index is close to its upper trend line.
 
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…
Technology (XLK) remained #1.
 
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock. 
Walmart (WMT) and Intel (INTC) remain essentially tied at #1 today.
 
Walmart?...
“The mighty Amazon.com has been a game-changer, a disrupter, an online retail pioneer that seems to be unstoppable. But old Wal-Mart Stores Inc. has a few tricks up its sleeve. The Bentonville, Ark.-based company’s investments in its employees, its online offerings and delivery, and its stores are paying off in a major way. Investors in Seattle-based Amazon should pay attention.” Commentary at…
 
Avoid GE, IBM, Merck, United Technologies, Verizon and Disney. Their 120-day moving averages are falling.
*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…
 
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
LONG
I sold my VXX position at a slight loss of 0.1% Friday. I had been up 7%, but the improvements in the markets caused VIX to tank and it reversed my profit in 2-days.
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
These rules must make one careful when shorting.
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals were Positive 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                                                        
Tuesday, Sentiment, Price, VIX & Volume indicators were neutral. With VIX recently below 10 for a couple of days in May, June, July, August, September, October and now November, 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.