“After a promising Shipments Index in October broke the
string of 20 months in negative territory, November fell back into negative
territory, albeit slightly. [Shipments were down 0.5% year over year]… Although
still in negative territory, the Cass Freight Expenditures Index also gives us
some hope. Expenditures were still down (-4.5% on a YoY (year-over-year)
basis), but as was true in October, it was less than the rates of contraction
in May, June, July and August…”
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 0.2% to 2263 at the
close.
-VIX fell about 4% to 11.71 at the close.
-The yield on the 10-year Treasury dipped to 2.54%.
Bearish Signs:
-Advancing volume remained down.
-Money Trend is now bearish
-The Sum of 16 Indicators turned sharply down.
-The smoothed %-advancing stocks declined today.
-The Top Indicator is still signaling a top as it has for
the last 11-days.
-XLI (cyclical industrials) is underperforming the
S&P 500 over the last month.
-The Index remains close to the upper Bollinger Band and
RSI was a “sell” a 6-days ago.
-The S&P 500 is 4% above its 50-dMA. Anything in a
range of 3-3.5% above the 50-day is bearish.
-Late day buying/selling has turned down slightly and is
giving a bearish/neutral indication.
-New-High/New-low data flipped down and is now mildly
bearish.
-Tick (sum of last trades up or down) was -283 for the
day. That’s somewhat negative for tomorrow but the 10-day average of Tick is +196;
a number over +300 is a bearish signal according to Tom McLellan.
Bullish Signs:
-My modified on-balance-volume in positive, but just
barely. This reflects bullish momentum
over the past 2-weeks.
Overall, the signals suggest a short-term top. I still
expect to see the Index fall 4-5% from its high.
Short-term, I sold my position in XLF as noted in today’s
earlier post. It seemed to me that a pause is due for the Financials since it
has been underperforming somewhat recently. (It is still the favored ETF in my
ranking system.)
Long-term I’m fully invested at 50% in stocks (a
conservative-retiree allocation). The long-term
trend remains up.
TRADING PORTFOLIO (Small-% of the total portfolio)*
Financial Select
Sector SPDR ETF (XLF) Est. 1 Dec.SOLD 19 Dec Gain: +1.7%
2x Short S&P 500 (SDS): Established 6 Dec.
2x Short S&P 500 (SDS): Established 16 Dec.
NET: +8.7%
*I am not really happy doing this much trading, but I
need to rebuild the trading balance after holding my shorts too long after the
February correction. (I really should
follow my own indicators. My system is smarter than I am!)
CURRENT RANKING OF 11 ETFs (Ranked Daily)*
#1 RANK for the past 28-days: Financial Select Sector
SPDR ETF (XLF).
#2 RANK: iShares Russell 2000 – Small Cap (IWM)
#3 RANK: Energy Select Sector SPDR ETF (XLE)
*For background on the ETF ranking system see NTSM Page
at…
This system is a momentum methodology that looks at
current price relative to past prices and picks a winner each day. I noticed
that the gain over the last 10-days or so has been greater for the IWM than the
XLF. That makes me wonder whether the
system should be refined by looking at how fast the various ETFs are
appreciating. I’ll keep that thought in
mind when I have some time for refinement.
MONDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 54.9%. (55.8% yesterday.) A number above 50% is usually
BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.8%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Rose from +14 to +42 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +82
(It was +84 yesterday.)
-10-day moving average of the change in spread: -11. In
other words, over the last 10-days, on average, the spread has decreased by 11
each day.
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).
LONG TERM INDICATOR
Monday the Sentiment, Price and VIX indicators were
neutral. The Volume indicator was positive. Overall the long-term indicator switched
to HOLD.
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.
