“The Federal Reserve says U.S. industrial production rose
0.9 percent in December, pulled higher by a surge in utility output, another
sign of health for the American economy.” Story at…
BEIGE BOOK (Federal reserve)
“Reports from the 12 Federal Reserve Districts indicated
that the economy continued to expand from late November through the end of the
year, with 11 Districts reporting modest to moderate gains and Dallas recording
a robust increase. The outlook for 2018 remains optimistic for a majority of
contacts across the country… On balance, employment continued to grow at a
modest pace since the previous report…Most Districts reported modest to
moderate price growth since the last report…” Press Release at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 0.9% to 2803.
-VIX was up about 2% to 11.91.
-The yield on the 10-year Treasury rose to 2.588%.
Not much changed from Friday’s list of indicators. The Bollinger Band indicator is now only 1pt
from overbought. RSI is still giving a sell signal. Most of the Topping
Indicators I listed Friday remain elevated. In addition, today was
statistically significant. That just means that the price-volume move up
exceeded statistical parameters that I track. The stats show that about 60% of
the time a statistically significant move up will be followed by a down day the
next day. Most tops are on a statistically-significant move up; but not all
statistically-significant days occur on a top. I wouldn’t be surprised to find
that today was a short-term top before a pullback in the 5-10% range; but I won’t
call a top now. This market is ignoring old stock market indicators and pushing
higher – it may continue.
My sum of 17 Indicators slipped from +7 to +5 today. On a
smoothed 10-day basis, values were higher. A “+” number means that most
indicators are bullish. This isn’t an all-clear though; conditions always look
good at a top.
I am bearish short-term; longer term I am a bull; but we
are due for a correction in 2018 due to Presidential election cycle history. I still wouldn’t short this market – there
are too many buyers. We’ve gone straight up, and a surprising number of people
think this market is going much higher.
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…
Under my system in 2017, Technology (XLK) was ranked in
the top 3 Momentum Plays for 52% of all trading days in 2017 (if I counted
correctly.) XLK was up 35% on the year.
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. Avoid GE. Its
120-day moving average is falling. Merck bounced yesterday with a new cancer
drug that is very promising.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
WEDNESDAY 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.)
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
Wednesday, Price and Volume indicators were positive; Sentiment
& VIX indicators were neutral. This adds up to a BUY indication, but at
this point a BUY signal is meaningless.
The NTSM system is designed to issue BUY signals near a Bottom as
conditions rapidly improve. Now, it is
just an indication that the market is doing well. The NTSM long-term signal can sometimes
signal BUY at the top if conditions are too good. The last actionable Buy signal
was on 15 November 2016.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain FULLY
INVESTED. 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.
