“Payroll processor ADP said Thursday that businesses
added 153,000 jobs in December in a possible sign the government’s
employment report this week will also show modest gains.” Story at…
JOBLESS CLAIMS (MarketWatch)
“The number of Americans who applied for unemployment
benefits after Christmas fell by 28,000 to the second-lowest level of the Obama
era, hugging close to a 43-year low…Initial claims sank to 235,000 …” Story at…
ISM SERVICES (MArketWatch)
“Service-sector growth remained strong in December, a key
survey released Thursday showed. The Institute for Supply Management said its services index stayed at
57.2% in December, matching a 12-month high.” Story at…
CRUDE INVENTORIES (Reuters)
“U.S. crude oil inventories fell sharply as higher
refining runs prompted a surge in gasoline and distillate stocks in the last
week of 2016, the Energy Information Administration said on Thursday…’The large
crude draw can entirely be explained away by the 7.1 million-barrel draw to
Gulf coast inventories, as tax mitigation strategies meant crude cargoes
remained offshore, rather than being brought onshore, where they would be
taxed,’ said Matt Smith, director of commodity research at ClipperData in
Louisville, Kentucky.” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.1% to 2269.
-VIX fell about 2% to 11.67.
-The yield on the 10-year Treasury was up slightly to 2.45%.
Bear Signs:
-The Top Indicator is still signaling a top as it has
since 21 December. (This indicator compares market internals to the S&P
500. The Index is way ahead of its supporting internals.)
-XLI (cyclical industrials ETF) is underperforming the
S&P 500 over the last 6-weeks.
-The Index is close to the upper Bollinger Band and the
upper and lower bands are getting very close together.
-The S&P 500 is 3% above its 50-dMA. Anything in a
range of 3-3.5% above the 50-day is bearish, but this can remain stretched for
a while.
-Late day buying/selling is flat to down giving a bearish/neutral
indication.
-VIX below 12 is in an area where pullbacks are expected.
Bull Signs:
-Money Trend is clearly up.
-The Sum of 16 Indicators is up.
-The %-advancing volume was above 80% on Tuesday and
Wednesday and that is generally a bullish sign.
-New-High/New-low data is bullish.
-Advancing volume turned up on a smoothed 10-day basis.
Overall, it still looks like a short-term top. The
Bollinger Bands are a reliable indicator as is my Topping Indicator. It’s really a matter of panic buying and that
may continue to stretch markets higher. I expect to see the Index fall 4-5% from its
high.
I still have short positions in the trading portfolio.
Long-term I’m fully invested at 50% in stocks (a
conservative-retiree allocation). The
long-term trend remains up.
CURRENT RANKING OF 11 ETFs (Ranked Daily)*
#1 RANK for the past 42-days: Financial Select Sector
SPDR ETF (XLF).
#2 RANK: iShares Russell 2000 – Small Cap (IWM)
#3 RANK: Energy Select Sector SPDR ETF (XLE)
While the XLF remains ranked #1 using the methodology
explained at the link below, IWM is outperforming the others over the past
3-weeks on a percentage gained basis.
*For background on the ETF ranking system see NTSM Page
at…
TRADING PORTFOLIO (Small-% of the total portfolio)*
2x Short S&P 500 (SDS): Established 6 Dec.
2x Short S&P 500 (SDS): Established 16 Dec.
NET: +8.7%
THURSDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 54.6%. (56.6% last trading day.) A number above 50% is
usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.6%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Fell from +132 to +89 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +122
(It was +194 last trading day.)
-10-day moving average of the change in spread: -5. In
other words, over the last 10-days, on average, the spread has decreased by 5
each day.
Market Internals
were neutral 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 Volume indicator was neutral. The Price and
VIX indicators were positive. The Sentiment indicator was negative.
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.
