“U.S. homebuilding jumped in February as unseasonably
warm weather boosted the construction of single-family houses to near a
9-1/2-year high, suggesting the economy remained on solid ground despite an
apparent slowdown in the first quarter.” Story at…
UNEMPLOYMENT CLAIMS (Detroit News)
“Fewer Americans applied for unemployment benefits last
week, a further indication of the health of the labor market. The numbers:
Applications for jobless benefits slipped by 2,000 to 241,000…” Story at…
PHILADELPHIA FED (MarketWatch)
“The Federal Reserve Bank of Philadelphia’s monthly index
on regional manufacturers fell to 32.8 in March from 43.3 in February, which
was the highest reading in 33 years, according to data released Thursday.” Story at…
JOLTS (CNBC)
“Monthly jobs openings — a gauge of the U.S. economy
that's closely watched by Fed chair Janet Yellen — were little changed in January, the
Bureau of Labor Statistics said on Thursday. Monthly job openings were at 5.6
million on the last business day in January…” Story at…
BOND MARKET – BIGGEST WORRIES ARE ECB AND JAPAN (CNBC)
…monetary policy in both Europe and Japan is causing
international investors to buy U.S. Treasurys, he [Bill Gross, Bond Guru] explained…"Once
[ECB President Mario] Draghi begins to taper, that probably won't
happen for a few months, but once he begins to taper and reduce that $80
billion a month, once that zero to 10 basis point cap is eliminated in Japan,
then hell could break loose in terms of the bond market on a global
basis," he told "Power Lunch." Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.2% to 2381.
-VIX fell about 4% to 11.21.
-The yield on the 10-year Treasury rose to 2.539%.
(Investors sold bonds and bought the small stocks.)
Curious day…Market internals improved, but the S&P
500 dropped. On the NYSE, advancers
outpaced decliners as did advancing volume.
New highs were way ahead of new-lows – what pullback? It didn’t look
like one today. Another odd sign is the
unusually large unchanged volume. This
seems to show some confusion by investors and some believe that it is
indicative of a top. (I was never able to confirm that view though.) Even if it
does, we have certainly seen enough false top-signals recently.
When the S&P 500 made an all-time high on 1 March it
was 9.7% higher than its 200-dMA. That’s
youuuuge and is a point that often indicates declines are in order. Wednesday,
it made another extreme in a mathematical equation I wrote that relates
Sentiment (%-Bulls) and the %-above the 200-dMA. Basically, it too hit an
extreme high usually associated with pullbacks. Are we going to have a
pullback?
We’re overdue, but that has been true for months. If internals keep improving, forgetaboutit.
We may have entered a new paradigm where stocks keep going up forever. At this point I agree with Irving Fisher:
“Stock prices have reached what looks like a permanently
high plateau.” - Yale economist Irving Fisher,
17 October 1929.
My sum of 16-indicators improved from -5 to +3. Money trend is moving up. Late day action
leans toward buying. New-High/New-Low
data has reversed upward - Looks like we might retest the highs. I wrote Wednesday,
that the next 2-days will be the key to see if the rally can continue. One
down; one to go.
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, the number 1 ranked Financials (XLF) outperformed
the S&P 500 by nearly 20%.
*For additional background on the ETF ranking system see
NTSM Page at…
I would avoid iEAFE (Europe and Far East); currently its
120-dMA is 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.
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.
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to Positive 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
Wednesday, Price was positive; Sentiment was negative
(Bullishness is at an extreme.); Volume & VIX indicators were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I reduced stock allocation to 25% stocks in the
S&P 500 Index fund (C-Fund) Wednesday, 1 March 2017 in my long-term
accounts.
Remainder is 75% G-Fund (Government securities). This is a conservative retiree
allocation based mostly on short-term signals.
