“Manufacturing activity in the Chicago-area unexpectedly
fell in January, nearing the mark for stagnation and dampening optimism over
the U.S. economic outlook, industry data showed on Tuesday. In a report, the
Institute for Supply Management (ISM) said its Chicago
purchasing managers’ index decreased
by 4.3 points to a seasonally adjusted 50.3 this month…” Story at…
CONSUMER CONFIDENCE (Bloomberg)
“Consumer confidence retreated in January from a more
than 15-year high…data from the New York-based Conference Board showed Tuesday.
[The] Confidence index fell to 111.8…” Story at…
WAVE THEORY WITH ASTROLOGY (SafeHaven)
I can’t begin to explain this version of Elliot Wave
Theory and Astrology, but the author has the same opinion as me. A small correction of about 5% from the top
is due.
Chart from…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 0.1% to 2279.
-VIX rose about 1% to 11.99
-The yield on the 10-year Treasury slipped to 2.459%.
Since the late-day action has been strong, let’s review
the Tea Leaves.
SHORT-TERM, TEA LEAVES
Neutral Signals
-The S&P 500 is near the middle of the upper and
lower Bollinger Bands and that is neutral; however, Bands are close together and
that is Bearish, so take your pick.
-The cyclical industrial stocks (XLI-ETF) are giving a neutral
indication since they are only slightly underperforming the S&P 500. It may
shift to the Bear side if it underperforms the S&P 500 for a day or two.
Bear signals:
-The Money Trend indicator remains slightly down and
that’s slightly bearish. Money Trend makes a rough estimate of dollars in and
out of stocks, but unlike Money Flow, it does not use Tick in the calculation.
-The Closing Tick (sum of last trades of the day) was a surprisingly
high 752. The 10-day closing Tick is high at 342. 10-dMA of closing tick is
considered a sell point when it exceeds of 300 per Tom McClellan.
-My Top Indicator is still at a level that is calling for
a pullback based on the S&P 500 outperforming the underlying Market
Internals.
-My sum of 16-indicators is now +1 on the day, but it was
+8 just 2-days ago. It is bearish on a 10-day basis and a smoothed version of the10-day
is pointing down too.
-The Calm-Before-the Storm indicator (based on
statistical analysis of market volatility) is still calling for a selloff.
(This indicator is similar to Bollinger Bands.)
-Advancing volume has been trending down since
mid-November.
-New-High/New-Low numbers are headed down.
Bullish indicators:
-Late day action is up and that’s bullish. It is usually interpreted to mean the Pros
are buying and this is a fairly reliable indicator.
The end of the month and the first couple of days of a
new-month are bullish as 401-k funds are invested, but overall, the market remains
stretched. As I’ve said for a while, I think the upside potential is limited
while the downside risk is fairly high, at least for a short-term pullback. I
remain a short-term bear; Long-term I am a Bull.
CURRENT RANKING OF 11 ETFs (Ranked Daily)*
#1 RANK for the past 59-days: Financial Select Sector
SPDR ETF (XLF).
Here’s today’s complete result of the ETF Ranking.
I would avoid IBB and XLV; currently their 120-dMAs are
declining.
*For background on the ETF ranking system see NTSM Page
at…
TRADING PORTFOLIO - 2017 (Small-% of the total portfolio)
Rydex 2x Short S&P 500 (RYTPX): Established 6 Dec.
2x Short S&P 500 (SDS): Established 16 Dec.
Long Volatility ETN (VXX): Established 6 Jan 2017.
NET:
Now I wish I had tightened trading rules sooner. I am
underwater again!
TUESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 52.1%. (50.2% prior trading-day.) A number above 50% is
usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.9%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Improved from -62 to -23
(percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +53
(It was +16 prior trading day.)
-10-day moving average of the change in spread: -3. In
other words, over the last 10-days, on average, the spread has decreased by 3
each day.
Market Internals
switched to 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
Tuesday, the Sentiment, VIX & Volume indicators were
neutral. The Price indicator was positive.
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.
