“The number of Americans filing for unemployment benefits
was unchanged last week and the underlying trend remained consistent with a
tightening labor market. U.S. workers filed 245,000 initial claims for state
unemployment benefits during the week that ended Dec. 23…” Story at…
CHICAGO PMI (American Institute for Economic Research)
“The Chicago Business Barometer, a composite index based
on a survey of purchasing mangers in the Chicago area, rose 3.7 points to 67.6
in December, the highest level since March 2011.” Story at…
CRUDE INVENTORIES (OilPrice.com)
“Amid a mixture of
news pulling oil prices in opposite directions the Energy Information
Administration reported another draw in U.S. crude oil inventories for the week
to December 22. The EIA said inventories had gone down by 4.6 million barrels…”
Story at…
The oil stocks are
benefitting from higher crude prices. Chevron is up 22% since it bottomed in
late July and is now not too far from its all-time high set in 2014.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.2% to 2688.
-VIX was down about 3% to 10.18.
-The yield on the 10-year Treasury was UP slightly to 2.433%.
My sum of 17 Indicators increased from +3 to +4. On a
10-day basis, values crept up. A “+” number means that most indicators are
bullish – perhaps too bullish. One indicator is signaling “sell”; one or two
others are stretched. Volume remains low.
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%. Every Tech stock on the Dow 30 slipped today so
it is no wonder that XLK has slipped to #4.
*For additional background on the ETF ranking system see
NTSM Page at…
Energy (XLE) and Financials (XLF) were tied at #1. The
markets are due for some reversion so perhaps I’ll get a better buying
opportunity later. I’ll wait before
adding any positions. (I hold XLK, DVY and SPY. DVY is a dividend play. SPY is
a good core holding.)
Under my system in 2017, Technology (XLK) was ranked in
the top 3 Momentum Plays for 52% of all trading days in the year (if I counted
correctly.) XLK is up 35% year to date. Its weighted Average PE is 23.7
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 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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained Neutral on the market. (Market Internals are based on a package of
internals and all must be positive to create a positive indication. This
Neutral reading may be the result of low volume overall since low volume makes
up-volume low even if up-volume outpaces down volume. On a percentage basis 58%
of the volume has been up-volume over the last 10-days and that’s reasonably
bullish.)
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
Thursday, Price indicator was positive; Sentiment was negative;
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.
