PAYROLL REPORT (Bloomberg)
“U.S. employers added 235,000 workers in February, more
than expected, following a 238,000 gain in January that was larger than
previously estimated…”
Story at…
Story at…
AVG HOURLY EARNINGS / AVG WORKWEEK (Business Insider)
“…average hourly earnings grew by 2.8% from
the prior year, well above the disappointing 2.5% rate in January and
coming in line with economists' expectations.” Story at…
My cmt: In other reports the Avg. workweek was unchanged.
THE MARKET DOESN’T ENTER A BEAR UNLESS THERE IS A
RECESSION.
At least that is what the pundits were saying this week
on CNBC. I’d like to point out that that wasn’t quite true in March of 2001.
The market collapsed on its own in a valuation/FED led downturn. Much later the NBER came back and decided the
recession started shortly after the S&P 500 peak. We are now in a position
where conditions are very much the same as 2001. Valuations are at extremes and
the FED is entering a tightening cycle. GDP growth was over 4% in the go-go
90’s, but with GDP now at only 1.8% (GDP-Now, Atlanta FED) there isn’t much
slack in the system to absorb these rate hikes. Will history repeat? As the new
saying goes, probably not, but it may rhyme.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was up about 0.3% to 2373.
-VIX fell about 5% to 11.66.
-The yield on the 10-year Treasury slipped to 2.578%. (The
Bond Ghouls were buying bonds – do they know something the stock guys are
missing?)
There are more bullish signs today.
-The mini-rally that started Thursday around 2PM carried
thru into Friday. That continued thru
the afternoon and we again saw late-day buying on Friday. One always wonders
whether a bottom has been made. We saw
volume drop slightly Thursday and a slight improvement in the percentage of
advancing stocks. Falling volume in a
downtrend usually means that selling is drying up. It’s hard to judge when
there has been very little selling as is the case now. Thursday wasn’t even a
lower low so these signs aren’t really reliable, but we do need to consider the
possibility that the short-term trend will shift upward again.
-In a reversal, New-highs exceeded new-lows today.
-The old stand-by Advance-Decline ratio is oversold; that’s
bullish.
-The sum of my 16-indicators rose from -6 Thursday to -1
Friday, but the longer term trend continues falling so this signal is mixed.
-The 50-day moving average of the S&P 500 is 2310 and
the Index never got close to that value. That suggests to me that this is just
a reflexive bounce and it may even be computer driven by the Wall Streeters.
Bearish signs remain.
-Sentiment remained screaming high at 83%-Bulls [(Bulls/{bulls+bears})
in selected Rydex/Guggenheim mutual funds] for Thursday at the close (This is
always a day late since I get this data late.)
On a standard deviation basis, that value matches extremes seen during
the dot.com crash.
-Closing Tick remains above 300 and that’s bearish.
-Money Trend remains pointing down sharply.
I think we’ll still see a pullback of some kind. 5-6%
seems reasonable, but bullishness remains strong, so we'll see.
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 improved
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
Friday, Price was positive; Sentiment was negative;
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.
