“The Federal Reserve delivered a monetary policy announcement in line with
Wall Street expectations, standing pat on interest rates and confirming the
timeline for winding down its $4.5 trillion balance sheet…Fed chair Janet
Yellen has expressed concern about persistently low inflation.”
Story at…
ADP EMPLOYMENT (USA Today)
“ADP…said Wednesday the private sector added 235,000 jobs
last month, more than the 196,000 economists had forecast. The Labor Department
on Friday is expected to tally 310,000 payroll advances by the public and
private sectors.” Story at…
ISM INDEX (Reuters)
“A measure of U.S. factory activity retreated from a
13-1/2-year high in October as some of the boost from hurricane-related supply
disruptions faded, but continued to point to strengthening manufacturing
conditions.” Story at…
CONSTRUCTION SPENDING (ABC News)
“U.S. construction spending increased 0.3 percent in
September as the biggest advance in government building activity in four months
offset weakness in other areas.” Story at…
AUTO SALES (LATimes)
“October was a good month for auto sales, driven by
general economic growth and continued vehicle replacement in the wake of
hurricanes in Houston and South Florida.” Story at…
EXTREME COMPLACENCY (MarketWatch)
“The Dow has traversed 51 [52 as of Tuesday] consecutive
trading sessions (and counting), since Aug. 18, 2017, without a 1% move,
representing the longest period without at least a 1% intraday move in history,
dating back to 1930…Similar to the Dow’s epic quiescence, the S&P 500 also
has enjoyed a period of nearly a year, or about 245 trading days, without a
decline of at least 3%.” Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 0.2% to 2579.
-VIX was up about 0.2% to 10.2.
-The yield on the 10-year Treasury was unchanged at
2.375%.
New-Highs bounced up today. That carried the long-term average higher and
that’s a bullish sign. It’s not always clear cut though; the spread (difference
between new-highs and new-lows) is falling over the same time period and that’s
bearish.
Up-volume is one of the few indicators that has remained
bullish for the last 2-weeks. Breadth (% of stocks advancing on the NYSE over
the last 10-days) increased slightly today, from 49.4% to 49.5% yesterday. It’s
still below 50% indicating that less than half of all stocks on the NYSE
advanced over the last 2-weeks.
Smart money is falling and has been for several weeks and
the sum of 17-indicators remains bearish, though it did improve from -6 to -4
today.
I still think down is more likely than up, but we’ll see.
See Friday’s blog post for more thoughts on the Markets – they haven’t changed.
A pullback in the range of 3-5% would be the norm.
Perhaps we’ll finally see a bigger (10% or more move down), but that is
anybody’s guess at this point. The
numbers suggest down; but the magnitude is unknown.
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) was #1; Aerospace and Defense (ITA) remained
#2 today and Financials (XLF) weren’t far behind.
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.
Intel (INTC) remained #1 today. I have owned Intel for
some time – I bought more yesterday, 10/31/2017. Avoid GE, Merck and Disney.
Their 120-day moving averages are falling.
*I rank the Dow 15 similarly to the ETF ranking system.
For more details, see NTSM Page at…
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
As noted Friday I did take a short-term VXX position on
27 Oct very near the close. This violates the rules below, but I am eternally
hopeful. I am still holding this
position. We’ll see.
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
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
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.
