CONSUMER SPENDING (Reuters)
“U.S. consumer spending accelerated in November and
shipments of key capital goods orders increased for the 10th straight month,
data showed on Friday, the latest signs of strong momentum in the economy as
the year winds down. But the bullish growth picture was dimmed somewhat as the
figures also showed household savings dropped last month to the lowest level in
more than nine years. Low savings could hurt consumer spending, though
economists are optimistic wage growth will pick up in the new year.” Story at…
PCE PRICES (Briefing.com)
“The PCE Price Index was up 0.2% (Briefing.com consensus
+0.3%), leaving it up 1.8% year-over-year versus up 1.6% year-over-year in
October… the PCE Price Index…is moving closer to the Fed's 2.0% longer-run
target, which is supportive of the Fed's inclination to pursue an upward drift
in the target range for the fed funds rate.” More at…
DURABLE GOODS (ABCnews)
“Orders for long-lasting manufactured goods rose last
month by 1.3 percent, boosted by orders for both commercial and defense
aircraft.” Story at…
NEW HOME SALES (USAtoday)
“Americans stepped up their purchases of new homes at the
fastest pace in more than 25 years in November, with sales skyrocketing 17.5
percent amid robust demand and a continued shortage of existing homes on the
market.” Story at…
MICHIGAN CONSUMER COONFIDENCE (Bloomberg)
“U.S. consumer sentiment fell by more than forecast in
December on declining confidence among lower-income Americans, as a gauge of
the outlook tumbled to a five-month low, a University of Michigan survey showed
Friday… Even with the drop, the Michigan index remains elevated by historical
standards…” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.1% to 2683.
-VIX was up about 3% to 9.90. (That is still an extreme
low number that signals too much complacency.)
-The yield on the 10-year Treasury was little changed at
2.484%.
My sum of 17 Indicators improved slipped to +6 on the day
from +8. There was, however, continued strong improvement on a 10-day basis. A “+”
number means that most indicators are bullish – perhaps too bullish. There are
a couple of topping indicators that are stretched and one or two that are Bearish.
We are due for a stall or pullback of some kind – we’ll
see.
Breadth compared to the S&P 500 remained
negative. The % of stocks advancing on
the NYSE does not support the Price change we have seen in the Index. This is a
pretty good indicator, but is not perfect – none are.
My version of Smart Money (based on late day action) remains
neutral so the Pros aren’t sure either.
In the near term I am mildly bullish; longer term I am a
bull, but I recommend caution with the Fed raising rates and shrinking its
balance sheet. This party could end sometime in 2018.
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…
Financials (XLF) moved into #1. The markets look a bit
strained so perhaps I’ll get a better buying opportunity. I’ll wait before adding any positions. (I
hold XLK, DVY and SPY. DVY is a dividend play. SPY is a good core holding.)
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.
Caterpillar was #1. (I hold Intel – I’m waiting for a
better entry point before adding other positions.)
Avoid GE, IBM and Merck. 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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals slipped
to Neutral on the market. (Market Internals are based on a package of internals
and all must be positive to create a positive indication.
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, Price indicator was positive; Sentiment, Volume & VIX
indicators were neutral. Price was too positive; it is so high that it is now a
worrisome sign. I would not be surprised to see some selling in January. With VIX recently below 10 for a couple of
days in May, June, July, August, September, October, November and now December,
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. VIX below 10 last occurred about 4-months before the year
2007 crash and also several months before the 2001 crash.
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.
