FALLEN ANGELS (Real Investment Advice)
“…though the body of the Administration has been diseased
(in multiple ethical, moral lapses and in other ways), many of those same
commentators who dismissed the mortgage derivative problem (a decade ago)
suggest ignoring the indictments and guilty pleadings of multiple campaign
members of the Trump team and the general culture of corruption that currently
exists in Washington, D.C. — that these considerations will have little impact
on policy, the balance of power, the economy and our markets. Many of the
same “talking heads” also possess the same view that bearish market
analysis rationale may sound superior to the bullish case – but, they too, in
the main, are wrong.” – Doug Kass. Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped about 0.3% to 2889.
-VIX rose about 6% to 13.91.
-The yield on the 10-year Treasury rose to 2.902% as of
this post.
The S&P 500 made a new high 4-days ago. It is not a
surprise to see Sentiment (%-bulls is selected Rydex, long-short funds) rise
after a top. Sentiment always peaks
after the top as dip buyers move in. For the most part we don’t know if the dip
buyers are correct – the markets could bounce up from here – however, it is
beginning to seem less likely that we’ll see a bullish resolution without a
drop of 3-5% off the top. That would put us somewhere around the 50-day moving
average, of 2821 (at present). We’ll worry if the Index falls below the 50-day
value.
Currently, my daily sum of 17 Indicators slipped from -6
to -9 (a positive number is bullish; negatives are bearish) while the 10-day
smoothed version that negates the daily fluctuations dipped from +32 to +14
indicating that conditions are worse than 2-weeks ago. Indicators continue to slip and have a
negative outlook at this point. Some specific details follow:
Utilities are outperforming the S&P 500.
Bollinger Bands and the Overbought/Oversold Ratio have
cleared their overbought signal, but today RSI was a high 76 and that’s nearly overbought
(RSI, 14-day, SMA).
Regarding my comment yesterday that the Price indicator
might trigger a Sell signal, on refection, I’ve reconsidered. The Price
indicator has a long way to drop before it would register a bearish value so a
flip to sell on the long-term indicator seems unlikely unless the markets
deteriorate a lot more.
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.
*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 switched
to NEGATIVE 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).
I am now 50% invested in stocks. For me, fully invested
is a balanced 50% stock portfolio. As a retiree, this is a position with which
I am comfortable unless I am in full defense mode or feeling especially
optimistic.
INTERMEDIATE / LONG-TERM INDICATOR
Intermediate/Long-Term
Indicator: Wednesday, the Price indicator was positive; Sentiment was
negative; Volume & VIX were neutral. Overall this is a NEUTRAL indication.
