“The growth in the U.S. economy in the final quarter of
Barack Obama’s presidency was left at 1.9%, held down by a bigger trade deficit
even as consumer spending rebounded strongly.” Story at…
CHICAGO PMI (Investing.com)
“Manufacturing activity in the Chicago-area increased
more than expected in February, bolstering 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 increased
by 7.1 points to a seasonally adjusted 57.4 this month…” Story at…
CONSUMER CONFIDENCE (Bloomberg)
“Consumer confidence unexpectedly increased in February
to the highest level since July 2001 as Americans grew more upbeat about
present and future conditions, according to a report Tuesday from the New
York-based Conference Board….Confidence index advanced to 114.8…” Story at…
JASON GOEPFERT (Sentiment Trader / from Raymond James)
“The Dow climbed to its 9th straight record. [As of
Monday, it made a 12th-straight record high.] Going back to 1897, the index has
accomplished such a feat only 5 other times. The momentum persisted in the
months ahead every time, with impressive returns. But when it ended, it led to
2 crashes, 1 bear market and 1 stretch of choppiness. The five instances were
1927; 1929; 1955; 1964 and 1987. ... Like many instances of massive momentum,
however, when it stopped, it stopped hard.” Commentary at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 0.3% to 2364.
-VIX rose about 7% to 12.92. (The Options Boys are getting nervous.)
-The yield on the 10-year Treasury rose to 2.394%. (The
Bond Ghouls are worried about the FED.)
Utilities are the safe haven for the pro investors. The Utilities ETF (XLU) is outperforming the
S&P 500 over the last 5-days and that suggests the Pros are getting
defensive. It was up nearly 1% Tuesday
while every other ETF I track was down, except for DVY (another defensive ETF);
DVY was flat. Further, cyclical stocks don’t do well in downturns and we note
that the Cyclical Industrial ETF (XLI) is underperforming the S&P 500 over
the same time-frame. Just further
evidence that investors are making moves to cut risk. Another is late-day price
action. Late-day action is trending down
on average over the last month, i.e. late day selling indicates a lack of
confidence in the rally.
Volume picked up a little and was about 15% over the
monthly norm; it will be interesting to see if selling momentum picks up.
Indicators are slightly negative, but the Sum of
16-indicators is pointing sharply down and that’s bearish. VIX is up about 20%
in the past 2-weeks. The options boys are concerned. The WSJ pointed out that the 10-year
Treasuries have been rising along with the Stock market. The article was titled, “Markets Flash
Warning Signs.”
It looks like investors are considering the possibility
that stocks might not go up forever.
My Long-Term Indicator includes some trend-following
indicators so it may not give a timely sell signal. Conservative investors may
want to lighten up on stocks now.
CURRENT RANKING OF 15 ETFs (Ranked Daily)
The top ranked ETF receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF. While momentum isn’t stock performance per
se, momentum is closely related to stock performance. For example, over the
4-months from Oct thru mid-February 2016, Financials (XLF) have outperformed
the S&P 500 by nearly 20%.
*For additional background on the ETF ranking system see
NTSM Page at…
I would avoid iEAFE and SCHE (emerging markets);
currently their 120-dMAs are declining.
Recommended ETF Portfolio of top 3:
1. Financial Select Sector SPDR (XLF)
2. iShares U.S. Aerospace & Defense (ITA)
3. Technology Select Sector SPDR ETF (XLK)
I have not yet established a position based on the ETF
Ranking; I am waiting for a better entry point. Neither IWM nor XLI will
perform well in a pullback so I’ll wait to move them up in the ranking if they
do in fact deserve it later on.
Energy (XLE) has slipped all the way to 14th
place. If Energy continues to slide the S&P 500 is likely to follow.
SHORT-TERM 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!
-“In a bull market, you can only be long or
neutral.” – D. Gartman
-“The best policy
is to avoid shorting unless a major bear market is underway and downside momentum
has been thoroughly established. Even then, your timing must sometimes be
perfect. In a bull market the trend is truly your friend, and trading against
the grain is usually a fool's errand.” – Clif Droke.
“There are two kinds of forecasters. Those who
don’t know, and those who don’t know they don’t know.”- John Kenneth Galbraith.
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained Negative 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, Price was positive; Sentiment Volume & VIX
indicators were 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.
