“U.S. employers posted fewer jobs in October than the
previous month, but job openings are still at a mostly healthy level that
points to steady hiring ahead. Job openings slipped 1.8 percent to 5.5 million…”
http://abcnews.go.com/Business/wireStory/us-employers-post-fewer-jobs-openings-stay-healthy-44034347
CRUDE INVENTORIES (24/7 Wall St.)
“U.S. commercial crude inventories decreased by 2.4
million barrels last week, maintaining a total U.S. commercial crude inventory
of 485.8 million barrels. The commercial crude inventory is now at the upper
limit of the average range for this time of year.” Story at…
SELL OIL (Stock Traders Daily)
“At Stock Traders Daily, we have officially recommended
that clients take profits from their oil related trades.”
My cmt: I am not an oil trader, but if this call is
correct, it doesn’t bode well for stocks.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 1.3% to 2241 at
the close.
-VIX rose about 4% to 12.22 at the close. (The Option
Boys think there’s a pullback coming.)
-The yield on the 10-year Treasury slipped to 2.35%.
We see plenty of short-term bearish indications:
-S&P 500 is 3.8% above its 50-dMA and that suggests a
pullback. The last time values were this
high was July and August of 2016, shortly before a roughly 5% pullback. This
value can get higher though; it has been as high as 5-6% above the 5-dMA in the
last 5-years. Currently though, it
appears to be signaling “too-far-too-fast”.
-The size of the UP-move Wednesday was statistically
significant and that means that the price-volume move exceeded my statistical
parameters and, in about 60% of the time, that leads to a down-day the next day
(Thursday).
-My very reliable Topping Indicator again flashed “TOP” again
today. (This isn’t necessarily signaling
a major top and may only be calling for a 3-5% pullback.)
-Bollinger Bands are signaling trouble too; the S&P
500 climbed above the upper Bollinger Band signaling an overbought condition.
RSI (14-day, SMA) was 76, just a whisker away from the overbought signal at 80
so that’s a decent confirmation.
-The smoothed Sum of 16-Indicators are still pointing
down.
Not everything was negative though.
“Money Trend” turned up on the strong day and the chart
guys like that the S&P 500 broke above 2020. The new-high/new-low data remained
positive too and Market Internals are positive.
All in all though, I am negative in the short run. I
added a small VXX position to my SDS based on my belief that the short-term
direction will be down. 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 22-days: Financial Select Sector
SPDR ETF (XLF).
#2 RANK: iShares U.S. Aerospace & Defense ETF (ITA)
#3 RANK: iShares Russell 2000 – Small Cap (IWM)
*For background on the ETF ranking system see NTSM Page
at…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 54.9%. (54.3% yesterday.) A number above 50% is usually
BULLISH for the markets short-term.
-150-day moving average of advancing stocks: rose to 52.9%.
(A value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: rose from 123 to 182 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +409 (It was +250 yesterday.)
-10-day moving average of the change in spread: +16. In
other words, over the last 10-days, on average, the spread has increased by 16
each day.
Market Internals
switched to 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
Wednesday 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.
