“The number of Americans filing for unemployment benefits
fell to a near 45-year low last week, pointing to strong job growth in February
and solid momentum in the economy…Initial claims for state unemployment
benefits dropped 7,000 to a seasonally adjusted 222,000 for the week ended Feb.
17…” Story at…
LEI (CNBC/Reuters)
“A key index tracking
10 economic metrics rose for the third straight month in January. The composite
indicator increased 1 percent in January from the prior month, besting
expectations of 0.7 percent from a survey of Reuters economists.” Story at…
CRUDE INVENTORIES (OilPricecom)
“After a surprise crude oil inventory draw reported by
the American Petroleum Institute, the Energy Information Administration
strengthened the good mood by confirming the draw, and a
much larger one than API’s 907,000
barrels. The authority reported inventories had fallen by 1.6
million barrels in the week to February 16.” Story at…
LAWSUITS CHALLENGE THE ELECTORAL SYSTEM (msn.com)
“A coalition that includes a Latino membership
organization and a former Massachusetts governor filed lawsuits on Wednesday
challenging how four U.S. states allocate their Electoral College votes in
presidential elections… The lawsuits were filed in federal courts in Massachusetts
and California…Critics complain that the Electoral College system allows a
candidate to win a presidential election despite losing the nationwide popular
vote.” Story at…
My cmt: The Founding Fathers were careful to establish
the Electoral college specifically to prevent electing a President by
popular vote. The point of the Electoral College was to prevent large states
from ignoring small states. It forces the Executive Branch to pay attention to
the smaller states by requiring a President to win a majority of STATES; not a
majority of VOTERS – doesn’t anyone read history anymore? (In a similar manner,
every state gets two Senators and that limits the power of large states in the
Legislative Branch.) If the Courts rule in favor of the Plaintiffs, the change
to the US will be stunning.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.1% to 2704.
-VIX was DOWN about 6% to 18.72.
-The yield on the 10-year Treasury was little changed at 2.920%.
52-week new-lows again exceeded
new-highs highs today. That’s a bearish
indication. Overall, market internals deteriorated, but were neutral for the day.
Today was somewhat of a repeat of yesterday. The S&P
500 peaked at Noon and dropped more than 1% all afternoon, a bearish sign. Closing
Tick (sum of last trades of the day) was a bullish +161, so it’s a mixed bag on
today’s market action. Overall, I’d have to say today was a bearish sign; the
markets have not been able to hang on to gains.
The S&P 500 remains down 5.9% from its recent high;
this is day 19 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. The average correction lasts about 50-days.
My sum of 17 Indicators dropped from +3 to -2 today – a bearish
sign on the day. The smoothed version has turned up and is bullish. At this
point the chart and 50-dMA is more important than the indicators.
We still can’t guess whether there will be a retest of
the low or not. A typical correction includes a waterfall collapse (it seems to
be over) followed by a bounce (we got the bounce), a lot of choppiness and then
a retest of the low over a period of about 50-trading days. We’ll see. It is
all up to the chart. Friday the S&P 500 was sitting slightly (0.3%) above
50-dMA; now it’s 0.9% below it. The
50-dMA is a critical point for the Index. If we can break significantly above
the 50-dMA and stay there for a few days it would suggest this correction is
more likely to end quickly.
The market was down 1.7% when I suggested that I was
reducing stock exposure to 40% based on numerous negative indicators. It remains
to be seen whether I’ll make money on that call. I am positioned for a retest
of the correction low. If it turns out to be a successful retest, I’ll be back
in stronger than before.
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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
deteriorated, but 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
Thursday, VIX
was negative; Volume, Sentiment and Price were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40%
invested in stocks and 60% in cash/bonds as of 31 Jan (A comparable TSP allocation
would be 40% in the S&P 500 Index fund (C-Fund) with the remainder 60%
G-Fund (Government securities).
