Friday, July 20, 2018

The Failure to Trickle Down … Stock Market Analysis… ETF Trading … Dow 30 Ranking

THE FAILURE TO TRICKLE DOWN (Real Investment Advice)
“As we have repeatedly written since last December, tax cuts were destined to only wind up in one place – in the pockets of shareholders and C-suite executives. But in an economy which is nearly 70% driven by the consumption of the bottom 90%, a fiscal policy which specifically targeted corporations (which are major political donors) was not likely the best strategy to promote a long-term increase in economic prosperity. Unsurprisingly, with the data now in, we once again come to find out that “trickle down” economics never actually trickles.” – Lance Roberts. Commentary and analysis at…
My cmt: Trump is well on the way to doubling the National Debt, again.
 
MARKET REPORT / ANALYSIS         
-Friday the S&P 500 slipped about 0.1% to 2802.
-VIX was down about 0.1% to 12.86. 
-The yield on the 10-year Treasury rose to 2.898%.
 
Another long day so I’ll keep this short…
Indicators are mixed with today’s aggregate of the 17-indicators close to a neutral number.  On the bright side, the Industrial Cyclical stocks (XLI-ETF) are now outperforming the S&P 500 over recent periods.  It has been underperforming since mid-June so this outperformance is significant.  It’s a bullish sign since when investors are nervous they sell cyclicals.
 
My daily sum of 17 Indicators remained -4 while the 10-day smoothed version that negates the daily fluctuations dropped from +8 to zero.
 
I remain fully invested.
 
MOMENTUM ANALYSIS:  
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. (On 5 Apr 2018 I corrected a coding/graphing error that had consistently shown Nike incorrectly.)
*I rank the Dow 30 similarly to the ETF ranking system. For more details, see NTSM Page at…
GE has been removed from my DOW 30 chart and Walgreens Boots Alliance (WBA) has been added to match the official DOW 30.  WBA is best known for operating Walgreens drug stores.
 
FRIDAY 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). 
18 Apr 2018 I increased stock investments from 35% to 50% based on the Intermediate/Long-Term Indicator that turned positive on the 17th. (It has since turned Neutral.) For me, fully invested is a balanced 50% stock portfolio. 50% is my minimum unless I am in full defense mode.
 
On 10 May 2018 I added stock positions to increase Stock investments to 58% based on more evidence that the correction is over. This is high for me given that we are late in this cycle (and as a retiree), but it indicates my bullishness after the correction. I’ll sell these new positions quickly if the market turns down.
 
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term Indicator: Friday, the Volume, VIX, Price & Sentiment indicators were neutral. Overall this is a NEUTRAL indication.