Friday, November 10, 2017

Michigan Sentiment … Republicans used to stand for Fiscal Responsibility. Now? Stock Market Analysis … ETF Trading … Dow 30 Ranking

MICHIGAN SENTIMENT (Fox Business)
“A measure of U.S. consumer sentiment dipped in early November from last month's 13-year high, as respondents' expectations of current and future economic conditions declined slightly. The University of Michigan on Friday said its preliminary reading on consumer sentiment was 97.8 in November, down from 100.7 in October.” Story at… 
 
REPUBLICANS USED TO STAND FOR FISCAL RESPONSIBILITY. NOW?
“…the Committee for a Responsible Federal Budget stated:
“Republicans in Congress laid out two visions in two budgets for our fiscal future, and…they choose the path of gimmicks, debt, and absolutely zero fiscal restraint over the one of responsibility and balance. Passing fiscally irresponsible budgets just for the sake of passing “tax cuts,” is, well, irresponsible. Once again, elected leaders have not listened to, or learned, what their constituents are asking for which is simply adherence to the Constitution and fiscal restraint.” Commentary at…
My cmt: Now? If Democrats are the Tax-and-Spend Party, Republicans are the Cut-Tax-and-Spend Party. Since neither are making any attempt to balance the budget; we’ll continue to steal from our children.
 
MARKET REPORT / ANALYSIS         
-Friday the S&P 500 was down about 0.1% to 2582.
-VIX was up about 7% to 11.29.
-The yield on the 10-year Treasury was essentially unchanged at 2.326%.
 
Not much difference from yesterday’s numbers. For commentary, just read yesterday’s blog post.
 
I’m still cautious and lean toward some downside ahead.
 
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. It‘s time to buy XLK, especially if we get a dip. It is interesting to see that Energy stocks (XLE) have moved up strongly recently and are now #3.
 
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. 
Intel (INTC) remained #1 today. I have owned Intel for some time – I bought more Halloween, 10/31/2017. Avoid GE, IBM, Merck, 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 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.
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, 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.