“Sales of new cars and trucks in the United States likely
set new records for December and the full year, automakers said on Wednesday,
and investors bid up shares in the sector as strong consumer confidence and
stable fuel prices bolstered the industry's outlook. Shares of General Motors
Co and Ford Motor Co were up about 5 percent in midday trading…” Story at…
FOMC MINUTES (Marketwatch)
“The minutes
showed some conflict over
the central bank’s pace of raising interest rates at the meeting….Although
there weren’t big surprises in the minutes “some investors may have gotten
ahead of themselves in terms of” their predictions for the pace of future rate
increases, said Colin Cieszynski, chief market strategist at CMC Markets. The
Fed has penciled in three rate hikes in 2017, according to a plot of Fed
members’ forecasts...” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 0.6% to 2271.
-VIX fell about 8% to 11.85.
-The yield on the 10-year Treasury slipped slightly to
2.44%.
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.
-Advancing volume remained down.
-The Index is again close to the upper Bollinger Band.
-The S&P 500 is 3.2% 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.
-The Advance-Decline ratio is again overbought. It’s now
higher than it was at the recent top on 13 December.
-Like yesterday, Wednesday was a statistically
significant day and that means that price-volume exceeded my statistical
parameters and, in about 60% of the time, that leads to a down-day the next day
(Thursday).
Bull Signs:
-Money Trend.
-The Sum of 16 Indicators is flat to slightly up.
-The smoothed %-advancing volume was above 80% for the
second day in a row and that is generally a very bullish sign.
-Late day buying/selling has been flat and seems to be
turning up slightly giving a bullish/neutral indication.
-New-High/New-low data is bullish.
Overall, it still looks like a short-term top. I expect
to see the Index fall 4-5% from its high, but it may still drift slowly higher
in the interim.
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 41-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%
WEDNESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 56.6%. (54.3% last trading day.) A number above 50% is
usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.7%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Rose from 40 to +132 (percentage
calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +194
(It was +134 last trading day.)
-10-day moving average of the change in spread: +11. In
other words, over the last 10-days, on average, the spread has increased by 11
each day.
Market Internals
were neutral on the market. (Advancing volume is still headed down on a 10-day
basis.)
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 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.
