“The service side of the U.S. economy that employs the
vast majority of Americans grew in November at the fastest pace in a year, with
most companies reporting that business is steady. The Institute for Supply
Management said its nonmanufacturing index rose to 57.2% last month from 54.8%.”
Story at…
GRINDING HIGHER (Raymond James)
“Recently, the S&P 500 experienced a “buying climax.”
A “buying climax” is the near-term exhaustion of demand for stocks. The final
surge of a “buying climax” tends to lead to an upward price spike followed by
waning demand allowing prices to pause and/or pullback. We think that is
precisely what happened last week. The pause has permitted the stock market’s
internal energy to rebuild, suggesting the S&P 500 (SPX/2191.95) is getting
close to grinding higher into our envisioned February short-term “timing
point.” Indeed, the picture is clearly bullish when you look at chart patterns
of the various indices.” – Jeffery Saut.
Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 0.6% to 2205 at the
close.
-VIX fell about 14% to 12.14 at the close.
-The yield on the 10-year Treasury remained 2.39%.
My very reliable Topping Indicator flashed “TOP” today. (This isn’t necessarily signaling a major top
and may only be calling for a 3-5% pullback.)
The only problem is that few other indicators are
confirming the negative reading. “Money Trend” flattened out and is now neutral.
The “SUM of 16-Indicators” turned up today on a daily basis. The smoothed value
of Indicators is flattened out (a neutral indication). Market Internals switched to Bullish. The
new-high/new-low data was also very positive today. We had a 3-std deviation swing in
new-high/new-low spread – that’s pretty bullish.
Friday I wrote, “I was close to
going short this afternoon, but with a couple of green shoots I didn’t.” I
couldn’t short Monday either; there just aren’t enough signals for me to go long or short in the
trading portfolio.
Long-term I’m fully invested at 50% in stocks (a
conservative-retiree allocation) – I remain “hold-my-nose” bullish. The long-term trend remains up.
TRADING PORTFOLIO (Small-% of the total portfolio)*
Financial Select Sector SPDR ETF (XLF) Est. 1 Dec.
NET: +8.2%
*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 20-days: Financial Select Sector SPDR
ETF (XLF).
#2 RANK: iShares U.S. Aerospace & Defense ETF (ITA)
#3 RANK: Energy Select Sector SPDR ETF (XLE)
*For background on the ETF ranking system see NTSM Page
at…
MONDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 54.7%. (52.3% yesterday.) A number above 50% is usually
BULLISH for the markets short-term.
-150-day moving average of advancing stocks: rose to 52.5%.
(A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: rose from 10 to 72 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +196 (It was +8 yesterday.)
-10-day moving average of the change in spread: +9. In
other words, over the last 10-days, on average, the spread has increased by 9
each day.
Market Internals switched
to Bullish 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, Volume and VIX indicators were
neutral. The Price indicator was positive. Overall the long-term indicator
remained Neutral.
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.
