- “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
RETAIL SALES (ABC News)
“U.S. consumers went on a shopping binge last month as
the holiday season began, leading to big gains among online
retailers, electronics stores and furniture stores. The Commerce
Department said Thursday that sales at retailers and restaurants jumped 0.8
percent in November from the previous month…” Story at…
http://abcnews.go.com/Business/wireStory/us-retail-sales-jump-november-strong-holiday-sales-51788735
JOBLESS CLAIMS (Reuters)
“The number of Americans filing for unemployment benefits
fell last week, a government report showed on Thursday. Initial claims for
state unemployment benefits declined by 11,000 to a seasonally adjusted 225,000
for the week ended Dec. 9…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.4% to 2652.
-VIX was UP about 3% to 10.49.
-The yield on the 10-year Treasury rose to 2.351%.
My sum of 17 Indicators declined from -3 to -4 on the day
and fell a lot on a smoothed 10-day basis.
Here are most notable bearish indicators:
-RSI improved today, but was bearish for several days
recently.
-Breadth continues to slip vs. the S&P 500; it is
clear that the Index has ahead of the underlying % of stocks advancing. That is usually bearish, but not necessarily
in a big way.
-Breadth fell again and the % of stocks advancing over
the last 10-days dropped to 49% today.
This just means that less than half of all stocks on the NYSE have
advanced over the prior 10-days.
-UP volume is falling on a smoothed 10-day basis.
-New-high/new-low data has switched to the bear side.
I am still leery of the advance in the S&P 500. We are due for a stall or pullback of some
kind – we’ll see.
In the near term I am leaning neutral to 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 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) remain #1. The markets look a bit
strained so perhaps I’ll get a better buying opportunity later. I’ll wait before adding any positions. (I
hold XLK, DVY and SPY.)
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) was #1, but Boeing (BA) is there too.
(I hold Intel. I’m waiting for a better entry point before adding other positions.
Intel is a value play and not a good momentum buy at this point.)
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 switched
to Negative 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
Thursday, Price indicator was positive; Sentiment, Volume & VIX
indicators were neutral. Price was too positive and is so high that it is now a
negative. 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.
