“U.S. single-family homebuilding and permits surged to
more than 10-year highs in November, in a hopeful sign for a housing market
that has been hobbled by supply constraints.” Story at…
Chart from WSJ.com at…
Intel was again the big winner on the Dow today and
climbed to #3 in my momentum ranking system. It is up almost 8.5% in the last 3-days.
It was #1 at the end of November. Note that Intel had been stalled for more
than 2.5-years and has recently broken out to the upside. It looks like profit
taking may be over; now we’ll see if it can continue higher. With a low PE of
16.5 and a 2.3% dividend yield this one remains a Buy. The average Dow 30 PE is
27 with a yield of 1.9%.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 0.3% to 2681.
-VIX was up about 5% to 10.03.
-The yield on the 10-year Treasury rose to 2.448%.
My sum of 17 Indicators improved from +4 to +8 on the day.
There was also strong improvement on a 10-day basis as well. The 10-day number
just means that conditions are better now than they were 2-weeks ago.
We are due for a stall or pullback of some kind – we’ll
see. I’m not seeing too many negative indicators, but there are a number of
indicators that are close to turning negative. Perhaps profit taking in the
new-year will start some real selling. For now, I’ll go with the flow.
Smart Money (based on late day action) is neutral so the
Pros aren’t sure now either.
In the near term I am leaning neutral to slightly
bearish; 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…
Technology (XLK) hasn’t been the leader since the end of
November. Today it is tied with Financials (XLF) at #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 (CAT) and Boeing (BA) have been trading first
place in the last few days. CAT is #1 today. (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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to Positive 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
Tuesday, 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. 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.
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.
