INDUSTRIAL PRODUCTION (USA Today)
“U.S. industrial production was unchanged in
February as mild weather curtailed utility usage but manufacturing output
rose for the sixth straight month.” Story at…
LEADING ECONOMIC INDICATORS (MarketWatch)
“The U.S. economy is set to accelerate, if a gauge that
historically correlates with future performance is on target. The Conference Board said its leading economic index rose 0.6% in February — the
third straight gain of that magnitude — to reach its highest level in more than
a decade.” Story at….
MICHIGAN SENTIMENT (CNBC)
“A measure of consumers' attitudes "remained quite
favorable" in early March, the University of Michigan reported on Friday. The
University of Michigan's Consumer Sentiment Index hit 97.6 in March, up from
96.3 in the previous month…” Story at….
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.1% to 2378.
-VIX rose about 0.6% to 11.28.
-The yield on the 10-year Treasury slipped to 2.504%.
(Investors bought bonds and bought the small-cap stocks.)
Friday there is a Bollinger Band Squeeze on the S&P
500. This is an indication of a lack of volatility. Moves in both directions have been very small
and the upper and lower bands (2-std deviations) are closer than they have been
in the last 6-months. The last time this happened was in early September 2016
and it preceded a 5% dip. Will it this time? I admit confusion at this point.
The small-cap stocks were up and advancers outpaced
decliners again on the NYSE as it did yesterday. Usually, the small-caps will
precede the large and we’d see the S&P 500 catch-up to the smalls in the
next session or two.
This time? I don’t know. Sooner or later this market is
going to break down.
Volume was extremely high, about 40% above the monthly
norm. Many believe that this is a sign
of “distribution” or the smart-money selling to the dumb-money. Today’s volume
can be attributed to Option Expiration, Quadruple Witching Day, so it’s not
possible to put much of a spin on the high volume. Supposedly, volume is low on
options expiration until late in the day.
That wasn’t the case today since there was high volume in the morning
too. I don’t know what it means though – distribution?
Still looks like Irving Fisher’s quote is spot on:
“Stock prices have reached what looks like a permanently
high plateau.” - Yale economist Irving Fisher,
17 October 1929.
My sum of 16-indicators remained at +3. Money trend is moving up. But not all was
positive: Late day action was decidedly bearish today since there was a late
day swoon of around a half-percent. I wrote Wednesday, that the next 2-days
will be the key to see if the rally can continue. The S&P 500 was down both
days, but internals were positive. Go figure. Based on price action the trend
may be slightly bearish, but one could make a good argument for a bullish stand
too. Sorry – indicators aren’t very strong.
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.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
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
Friday, 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.
