“American service companies expanded in February at the
fastest rate since October 2015 amid stronger orders, signaling momentum in the
economy’s biggest sector. The Institute for Supply Management’s
non-manufacturing index, which covers almost 90 percent of the economy,
increased to 57.6 from 56.5 in January…” Story at…
My cmt: There’s has been a lot of good news on the
economy recently. It looks like too much
to me since it is much more likely that the FED will begin rate hikes soon.
Several hikes this year may not be good for the stock market.
MANUFACTURING FLASH PMI (MarketWatch)
“Momentum in both the U.S. manufacturing and service
sectors slowed in February, according to data released Tuesday. The Markit flash U.S. manufacturing purchasing managers index fell to a seasonally
adjusted reading of 54.3 from 55 in January.” Story at…
THIS ISN’T THE DOT.COM BUBBLE – IT’S WORSE (MarketWatch)
“Even though current valuation measures are not as
extreme as in 1999, today’s economic underpinnings are not as robust as they
were then,” he [Michael Lebowitz] wrote. “Such perspective allows for a unique
quantification, a comparison of valuations and economic activity, to show that
today’s P/E ratio might be more overvalued than those observed in 1999.” In
this chart, Lebowitz stacks up the metrics from the years running up to the
dot-com explosion versus what we’ve seen since 2012…Meanwhile, Snapchat’s
surging market capitalization just
surpassed that of
American Airlines”
Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 1pt to 2383.
-VIX dropped about 7% to 10.96. (Holy Bull Market Batman!
I can’t explain that.)
-The yield on the 10-year Treasury rose slightly to 2.483%.
Volume was about normal relative to the monthly
average. It looked like the dip-buyers
pushed after the mid-morning low, but couldn’t get too much traction. The S&P 500 climbed all-day, but finished
close to where it started. 52% of stocks advanced today; pretty close to
breakeven. Advancing volume was more bullish as 58% of volume was advancing.
The new-hi/new-lo data looks very bearish so we’ll see if new-hi/new-lo data
continues to deteriorate.
RSI finally dropped below 80 after 9-days at 80 or above
(the sell signal). It has a ways to fall before it generates a buy.
The sum of 16-indicators was zero (neutral) today and the
longer trend improved. Money Trend is pointing down. The Pros are still selling
based on Late-day action that has been trending down on average over the last
month, but today there was late day buying.
Overall there is a bearish bent to the data, but not
drastically so. We’ll need some more
time to establish a trend. Down or Up?
We’ll just have to wait.
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) 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)
XLI was slightly ahead of the XLK, but not enough to
change the recommendation. Further, if
there is a correction, XLI is likely to be among the worst performers.
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 improved
to Neutral on the market; both stocks advancing and advancing volume improved on
a 10-day basis.
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 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.
