“The number of Americans filing for unemployment benefits
fell from a five-month high last week, pointing to labor strength that
underscores the economy's sustained momentum…Initial claims for state
unemployment benefits dropped 10,000 to a seasonally adjusted 258,000 for the
week ended Dec. 3…” Story at…
My cmt: The Fed will hike next week.
OLDEST INDICATOR IS RED (Marketwatch)
“I hate to rain on this parade. But…there is now a
significant and rising risk of a crash, and a bigger risk of simply very poor
returns…In a nutshell: Investors shouldn’t flee stocks simply because the
Shiller PE is above average. They shouldn’t flee stocks even when the Shiller
PE is way above average. But history has said they should flee stocks when the
Shiller PE is at extreme levels — like now.” Story at…
My cmt: This still isn’t a short term indicator. I’d
prefer to wait for my system to confirm this before selling. Still it is
a cautionary sign and investors should adjust their stock holdings
accordingly. As a retiree, I am
comfortable with my current 50% stock portfolio.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.2% to 2246 at
the close.
-VIX rose about 2% to 12.48 at the close. (The Option
Boys are still acting like there’s a pullback coming.)
-The yield on the 10-year Treasury was up to 2.39%.
The short-term bearish indicators mentioned yesterday all
remain. Today we have one more: the
Advance Decline Ratio is now overbought to go along with the Bollinger Bands
that were overbought yesterday. RSI
(14-day, SMA) was 75 Thursday, just a whisker away from the overbought signal
at 80 so that’s a decent confirmation. RSI signaled a clear sell last week.
S&P 500 is 3.9% above its 50-dMA and that suggests a
pullback. My very reliable Topping
Indicator again flashed “TOP” again today.
Not everything was negative though.
“Money Trend” remains up. The new-high/new-low data
remained positive. Market Internals remained positive and the smoothed Sum of
16-Indicators is now flat instead of headed down.
Still, I am negative in the short run. It looks like a 5%
pullback is overdue to me.
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.
2x Short S&P 500 (SDS): Established 6 Dec.
Long Volatility ETF (VXX): Established 7 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 23-days: Financial Select Sector
SPDR ETF (XLF).
#2 RANK: iShares Russell 2000 – Small Cap (IWM) (IWM
moved up.)
#3 RANK: iShares
U.S. Aerospace & Defense ETF (ITA) (ITA dropped down.)
*For background on the ETF ranking system see NTSM Page
at…
THURSDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 56%. (54.9% yesterday.) A number above 50% is usually BULLISH
for the markets short-term, but 56% is overbought a negative for further gains.
-150-day moving average of advancing stocks: remained
52.9%. (A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: rose from 182 to 187 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +469 (It was +409 yesterday.)
-10-day moving average of the change in spread: +24. In
other words, over the last 10-days, on average, the spread has increased by 24
each day.
Market Internals remained
POSITIVE 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
Thursday 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.
