“Factory activity across New York state remained in
positive territory, according to a report from the Federal Reserve on Tuesday,
and firms remained optimistic about future conditions. The Federal Reserve
Bank of New York's general business conditions index came in at 6.5 this month
from a reading of 7.6 in December.” Story at…
MASSIVE STOCK MARKET SELLOFF (MarketWatch)
“If options traders are correct, stocks are in for a wild
ride in February.
Demand for one-month call options tied to the CBOE
Volatility Index, a popular gauge of stock-market volatility, has spiked in the
past week, a sign that some are bracing for a sharp downturn following the
inauguration of President-elect Donald Trump.” Story at…
http://www.marketwatch.com/story/investors-are-bracing-for-a-massive-stock-market-selloff-2017-01-13
LANCE ROBERTS COMMENTARY (RIA)
“….since the beginning of the year, the rush to pile into “Trump Trades” has quickly evaporated as
transaction volumes have plunged as “anticipation” has turned into “wait and see.” It is worth noting that previous, when
transaction volumes have plunged to such low levels, the markets were generally
at an inflection point of a correctionary process. With the markets currently extremely
overbought and extended, the reality of a “sell the inauguration” trade
is possible.” - Lance Robert. Commentary at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 0.3% to 2268.
-VIX rose about 6% to 11.87.
-The yield on the 10-year Treasury dipped to 2.323%.
I am beginning to wonder about my on-going “bear call”. As
evidence I present (above) just two of the bearish articles I have seen
recently. I have long noted that when everyone is sure something will happen in
the stock market, the outcome is usually the opposite. In short, if everyone thinks the market is
going down, it won’t. Further, and this
is a relatively new development, the Wall Street algorithms are designed to bet
against the crowd. The market is stretched and it will drop, but perhaps it
will take even longer for this pullback to occur. We’ll see…
The following, although updated, is somewhat repetitive;
but not much has changed recently.
Bear signals:
-The old standby Advance-Decline Ratio remains
“overbought”.
-The 10-day closing Tick is high at 344. Closing tick of
300 is considered a sell point per Tom McClellan
-The S&P 500 Index remains close to its upper
Bollinger Band a decidedly bearish indication.
-Late day action is down on a 10-day basis, but it
depends how one measures this – on a percentage of price it is down.
-My Top Indicator is still calling for a pullback based
on the S&P 500 outperforming the underlying Market Internals. Even though
today was down, the indicator turned more bearish.
-The cyclical industrial stocks (XLI-ETF) is
underperforming the S&P 500 and that shows investor worry. If one is
worried, sell the cyclicals first.
Bullish indicators:
-Money Trend has been moving up. It estimates dollars into and out of
stocks.
-My sum of 16-indicators is now +6 on the day, down from
+8, but it has been improving on a 10-day basis…but I remain unconvinced
because my short-term indicators are still pointing down.
The market is stretched and may continue to stretch
higher, but overall, 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’m fully invested at 50% in stocks (a
conservative-retiree allocation – I don’t do short-term timing with retirement
money).
CURRENT RANKING OF 11 ETFs (Ranked Daily)* - Unchanged -
#1 RANK for the past 49-days: Financial Select Sector
SPDR ETF (XLF).
#2 RANK: iShares Russell 2000 – Small Cap (IWM)
#3 RANK: iShares U.S. Aerospace and Defense ETF (ITA)
*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:
TUESDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks
advancing (NYSE): 56.9%. (56.9% prior trading-day.) A number above 50% is
usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 52.8%. (A
value above 50% indicates a long-term, up-trend.)
-McClellan Oscillator: Dropped from +51 to +19
(percentage calculation method adjusted to fit McClellan’s values).
-New-highs minus new-lows: +83
(It was +124 prior trading day.)
-10-day moving average of the change in spread: +4. In
other words, over the last 10-days, on average, the spread has increased by 4
each day.
Market Internals slipped
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.
