“…with 95% of the companies in the S&P 500 reporting
earnings for Q3 2016)… the blended earnings growth rate for the S&P 500 is
3.0%. The third quarter marks the first time the index has seen year-over-year
growth in earnings since Q1 2015 (0.5%).”
From…
My cmt: This is the real reason for the Trump rally.
HOME SALES (USA Today)
“Existing homes sold at the fastest pace in nearly
10 years last month despite persistently skimpy supplies as faster wage gains
and low mortgage rates motivated buyers. Sales increased 2% to a seasonally
adjusted annual rate of 5.6 million…” Story at…
TPP (MishTalk)
“President Obama made a foolish decision to not welcome
China in the formation of the Trans-Pacific Partnership (TPP)…China is the
second biggest economy in the world, third if you treat the EU as a block. Had
China been in the deal all along, we may not have seen the ludicrous provision
that allowed companies to sue governments. That provision was one of the key
reasons the deal failed.” Commentary at…
https://mishtalk.com/2016/11/16/australia-snubs-obama-dumps-tpp-opts-for-china-sponsored-trade-deal/
My cmt: TPP was dead in the Congress so Trump’s
announcement to withdraw the US from the agreement has little effect.
RECESSION COMING in 2017? (Financial Sense)
“If we assume that the Conference Board US LEI continues
to weaken from its current 1.1% year-over-year growth rate, historically
speaking the average time it takes before we see a recession is 9 months, which
would put us on track for August 2017, ranging from as short as 3 months
(February 2017) to as long as 18 months (May 2018).” Commentary at…
My cmt: We’ll see.
There is no way to know if the LEI will continue to weaken.
DOLLAR STOCK CORRELATION (The reformed Broker)
“Jon Krinsky’s note this weekend contained an important
chart reminding investors that the US dollar is not, in and of itself, a
long-term threat to the stock market. Without question stocks can be
either positively or negatively correlated with the dollar and then
the trend can either fade or completely switch in a 180.” Commentary at…
Chart from…
Outflows from ETF’s can be a Bullish indicator because
the masses are often wrong. I used to track this as an indicator, but I quit
because there wasn’t good correlation, at least in the mutual fund data I was
following. An indicator built on inflow/outflows is hard to use because sometimes
the masses are right. The above chart is based on the week ending 18 November.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 0.22% to 2203 at
the close.
-VIX was down about 0.1% to 12.41 at the close.
-The yield on the 10-year Treasury declined (What!) to
2.32%.
I closed out my trade in the 2x S&P 500 ETF (SSO)
today due to several bearish indications:
-The 10-dMA of closing Tick yesterday was 396. (Today it’s 400.) A number over 300 is an
indication of an overbought market according to Tom McClellan. (Closing tick is
the sum of last trades of the day {up +1 or down -1} for all NYSE stocks.)
- The Advance/Decline ratio that is still indicating
overbought;
- The S&P 500 is very near its upper Bollinger Band.
- RSI is overbought at 84 (14-day SMA).
- Advancing volume is slipping.
- The SUM of 16-indicators has flattened out and may
have topped.
- My Money trend indicator has topped out and is
declining.
- My topping indicator is very near a sell.
Could the markets keep going up? Of course they could,
but the risk is higher now for my short-term trade so I’d rather take the
profit. I won’t make another trade until signals get clearer.
Long term I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish. For now the long-term trend remains up.
TRADING PORTFOLIO (Small-% of the total portfolio)
2x S&P 500 ETF (SSO) Established 15 Nov. SOLD 22 Nov.
Gain: +2.1%
NET: +8%
TUESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 57.7 %. (56.4 % yesterday.) A number above 50% is usually
BULLISH for the markets short-term.
-150-day moving average of advancing stocks: Rose to 52.6%.
(A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: rose to +181 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +249 (It was +183 yesterday.)
-10-day moving average of the change in spread: +21. In
other words, over the last 10-days, on average, the spread has increased by 21
each day.
Market Internals
remained Neutral on the market, but improved slightly.
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
Tuesday the Sentiment indicator was neutral. The Price
and Volume indicators were positive. The VIX indicator was neutral. Overall the
long-term indicator remained BUY. This just means that the conditions have been
positive recently. The actionable
buy-signal was last August and September.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I increased stock allocation to 50% stocks in
the S&P 500 Index fund (C-Fund) Friday, 23 Sep 2016 in my long-term
accounts.
Remainder is 50% G-Fund. This is a conservative retiree allocation.
