“The annual pace of growth in the U.S. was trimmed to
2.5% from 2.6% in the fourth quarter, leaving a picture of a steadily growing
economy intact. A slower inventory build accounted for the downward revision.”
Story at…
CHICAGO PMI (MarketWatch)
"Chicago PMI slipped in February to a reading of 61.9, a
six-month low, from 65.7 in January… ‘despite the Barometer’s broad-based
decline, activity remains upbeat,’ said Jamie Satchi, economist at MNI
Indicators.” Story at…
CRUDE INVENTORIES (OilPrice.com)
“A day after the American Petroleum Institute gave oil
bulls a cold shower by reporting a 933,000-barrel
build in crude oil inventories on top of a gasoline build, the
Energy Information Administration deepened the gloom by reporting a
3-million-barrel build for the week to February 23.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 1.1% to 2714.
-VIX was up about 7% to 19.85.
-The yield on the 10-year Treasury slipped to 2.862%.
SENTIMENT. I measure Sentiment as %-Bulls
(Bulls/{bulls+bears}) based on the amounts invested in Rydex/Guggenheim mutual
funds. Sentiment has bounced up quickly and is now only slightly below levels
seen during the dot.com crash on a standard deviation basis. It is currently at
87%-bulls (as of Tuesday’s close). I really may be sorry I jumped back in. The
rising Sentiment is a big worry.
The S&P 500 made a low (2649) on high volume after
the waterfall drop on 5 Feb. On 8 Feb it fell further on high volume to 2581.
Many said that was a successful test and the market action looked like they
were right. I was suspicious that the
correction might have more to go, because the 2nd move down was on
slightly higher volume suggesting
that selling wasn’t over. When the market moved above the 50-dMA and indicators
were improving, I blinked and got back in. Was that the right thing to do? We don’t know. The last two days have shown a
sharply falling Index in the afternoon with weak closes. That’s a bearish sign and the Pros have been
selling hard in late-day trading over the last 10-days. This indicator has
gotten more bearish over the past few days.
Today, my sum of 17 Indicators slipped from +4 to -2
today. Negative numbers are bearish since this is just a sum of positive and
negative indicators. The smoothed version has stalled and is neutral. The Index
has fallen below its 50-dMA so now it will have to break above it before we feel
more positive. Volume was higher today on the NYSE so fear seems to be picking
up again.
Worse, one of the more reliable indicators that looked
good, new-high/new-low, has turned down.
Overall, we’ll just have to watch. IF the Index retraces
to the prior low, we’ll should have the information to decide whether the
correction is really over. For now, we don’t know. At 50% invested in stocks, I
have funds to add to stock holdings if we do a full retracement to the low.
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%. 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 while the S&P 500 was up 18%.
*For additional background on the ETF ranking system see
NTSM Page at…
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.
*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 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, the VIX
indicator was negative; Volume, Sentiment and Price were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
27
February, I increased stock holdings from 40% to 50% with the remainder in a
mix of stocks and (mostly short-term) bonds. (A comparable TSP allocation would
be 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund
(Government securities). This is a conservative retiree position.
