“U.S. consumer spending rose less than forecast in
February even as wage growth improved, according to government data that also
showed inflation reached the Federal Reserve’s goal for the first time in
almost five years. The 0.1 percent advance in consumption followed a 0.2
percent gain the prior month…” Story at…
CHICAGO PMI (MarketWatch)
“A reading of Chicago-area economic activity nudged
higher in March to cap the strongest quarter in more than two years, a sign of
the growing business optimism since the election of President Donald Trump. The
Chicago PMI rose to 57.7 in March…” Story at…
MICHIGAN SENTIMENT (Bloomberg)
“Consumer sentiment rose in March as Americans registered
sunnier views about the state of their finances while becoming less upbeat
about the long-term economic outlook, University of Michigan survey data showed
Friday.” Story at…
HOW THE US GOT TO $20-TRILLION IN DEBT (MarketWatch)
“Fighting wars, big tax cuts and economic stimulus
packages have all added to the debt burden” Story at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.2% to 2363.
-VIX rose about 7% to 12.37.
-The yield on the 10-year Treasury slipped to 2.385%.
(Traders sold stocks and bought bonds.)
It’s all about the chart.
The S&P 500 climbed to the descending trend line shown by the Red
arrow, but was unable to close above the line.
To break the down trend, most traders would say the Index must close
above the trend line on consecutive days or it must close 3% above the line.
The Index made it up to 2370 (at the line), but tanked in
the last half hour of trading. Perhaps traders (or the computers) panicked.
While it failed today, there wasn’t much bad news below
the surface on the NYSE. The Russell 2000 was up 0.26% although it too had a
late day swoon. Advancing stocks outpaced decliners and up-volume was higher
than down-volume. New-highs were well ahead of new-lows. While the Index gave
up its gains in the last half hour, closing Tick (the sum of last trades of the
day) was a very high +740. Apparently, there were a lot of buy-at-the-close
orders. Over the last 10-days 54.3% of
stocks on the NYSE have advanced. On the day, 59% advanced and that’s
reasonably bullish.
There are some bearish signs though. Industrial Cyclicals
(XLI) are underperforming the S&P 500 on nearly every time frame. Cyclicals are the first to go when traders
get concerned so this stat is concerning.
Money Trend is pointing down somewhat. The Sum of 16-Indicators is in
negative territory (-5 yesterday), but it improved to -4 today. Longer term
they are improving. Smart Money (late-day action) was down on the day, but it
remains flat longer term. The Pros
haven’t made up their minds so we must be somewhat concerned in the short-term.
I remain cautiously bullish, both short-term and longer
term.
CURRENT RANKING OF 15 ETFs (Ranked Daily)
Recently (before today) the Financials (XLF) have been
falling and my momentum rank hadn’t moved much. I looked back at some of the
prior analysis and decided to use my older version of the Momentum System. Up
until last week, the two versions were nearly identical.
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) & XLE;
currently their 120-dMAs are declining.
Recommended ETF Portfolio of top 3:
1. Technology Select Sector SPDR ETF (XLK)
2. Schwab emerging Markets (SCHE)
3. Consumer Discretionary (XLY), XLF, IBB, XLV, & ITA
are all close enough to be tied.
(I took positions in XLF and XLK Wednesday, 29 March.)
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
I closed all remaining short positions on 3/28/2017. My losses were big enough that I am too
embarrassed to list them here.
- Rydex S&P 500 2x Strategy. Established 3/28/2017
- 2x S&P 500 ETF (SSO). Established 3/28/2017
-“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
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, Sentiment, Price, 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, 24
March 2017 in my long-term accounts, based on short-term indicators.
Remainder is 50% G-Fund (Government securities). This is a conservative retiree
allocation based mostly on low volume at the test of the recent bottom.
