Friday, February 16, 2018

Housing … Michigan Consumer Sentiment … Stock Market Analysis … ETF Trading … Dow 30 Ranking

HOUSING (Reuters)
“U.S. homebuilding increased to more than a one-year high in January, boosted by a rebound in the construction of single-family housing units, and further gains are likely as building permits soared to their highest level since 2007.” Story at…
 
CONSUMER SENTIMENT (MarketWatch)
“The University of Michigan said its consumer-sentiment index rose to a reading of 99.9 in February, up from 95.7 in January and the second-highest level in 14 years.”  Story at…
 
MARKET REPORT / ANALYSIS         
-Friday the S&P 500 was up about a point to 2732.
-VIX was down about 2% to 19.46.
-The yield on the 10-year Treasury slipped to 2.875%.
 
The S&P 500 is Sitting slightly (0.3%) above 50-dMA. That’s not enough to say that the Index has broken thru its 50-dMA on the road to recovery.
 
The S&P 500 remains down 4.9% from its recent high; this is day 16 in the correction. If the bottom was 8 Feb (the recent low), then this “correction” lasted 10-days top to bottom.  A 2-week correction is awfully short and difficult to believe.
 
My sum of 17 Indicators improved from 0 to +3 today – a bullish indication. The smoothed version has turned up and is bullish too.
 
I’d be surprised if Indicators weren’t turning more positive after the 5% bull move we’ve had this week. We still can’t guess whether there will be a retest of the low...or not.
 
We’re still waiting, so to repeat: The S&P 500 remains in a zone that is critical. If the Index can move higher (or break above Fibonacci resistance level for believers), a “V” correction is likely with the Index making a quick recovery near the prior highs is more likely. If not, the bounce may be over and the correction may look more like the typical correction that includes a lot of choppiness after the bounce and a retest of the recent low. We’ll see.
 
TODAY’S RANKING OF  15 ETFs (Ranked Daily)
In corrections this chart may be less valuable – all stocks are falling.
 
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)
In corrections this chart may be less valuable – all stocks are falling.
 
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…
 
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals were positive 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                                                        
Friday, Sentiment, Price and VIX Indicators were negative; Volume was neutral.
 
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40% invested in stocks and 60% in cash as of 31 Jan or 50% in the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government securities). For none Government employees holding short-term bonds would be OK rather than 60% cash.