“Texas factory activity increased for the ninth
consecutive month in March, according to business executives responding to the
Texas Manufacturing Outlook Survey. The production index, a key measure of state
manufacturing conditions, rose two points to 18.6, suggesting output growth
picked up pace this month. Other measures of current manufacturing activity
also indicated expansion in March.” - Dallas Federal Reserve. Report available
at…
For trend analysis of this series see Advisor
Perspectives at…
MUSICAL CHAIRS [TO PRODUCE LOSSES OF 50%] (Hussman Funds)
“On the first day of March 2017, the combined market
capitalization of U.S. nonfinancial and financial stocks reached $34 trillion.
Those trillions of dollars in paper wealth filter down to the investment
statements of millions of investors, reflected in quotes on computer screens
and blotches of ink on paper. Over the completion of the current market cycle,
we estimate that roughly half of U.S. equity market capitalization - $17
trillion in paper wealth - will simply vanish.” John Hussman, PhD. Weekly
Market Commentary at…
NEGATIVE EXPECTATIONS (SafeHaven.com)
“There have been no confirmed short-term positive signals
so far. We still can see medium-term overbought conditions along with negative
technical divergences. Therefore, we continue to maintain our speculative short
position (opened on February 15 at 2,335.58 - opening price of the S&P 500
index).” – Paul Rejczak.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was down about 0.1% to 2342.
-VIX slipped about 4% to 12.50.
-The yield on the 10-year Treasury was down to 2.378%.
The S&P 500 slipped below the 50-dMA in the morning and
then bounced up from there. The Index was on the rise most of the day, but was
flat in late day trading.
Over the last 10-days late-day trading has been slightly
down, but it was in a steeper downtrend previously. The flattening of the curve
may be a bullish sign and it will be if the trend flips upward.
There still hasn’t been a close below the 50-dMA, but
Market Internals keep improving slowly (even though they were negative today overall) so the 50-dMA is looking less important.
(I had expected that the Index might test its 50-day on a closing basis.) With the
recent slow improvement in internals I remain leaning toward a bullish stance
now.
I wrote Friday that “This [buy signal for the S&P 500]
could be a fake out; in a mini-correction the signals are highly suspect…” The low volume Friday could have been the
result of the trading-crowd waiting on the Obamacare vote and simply sitting
out trading in the stock market. Volume
was up today, Monday, but still about 10% below the monthly average so I think
volume leans toward bullishness since it suggests selling is drying up. Price
action today agreed.
In response to the improvements I moved back in at a 50%
in stock position in long-term accounts Friday and pared my short positions
slightly. As I have written for a couple of days, I don’t know that the market
can breakout significantly above the old highs, but it might try. The up-side is
still limited and a correction is overdue (based on past and present signals);
but it looks like it may be postponed again.
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) & XLE;
currently their 120-dMAs are declining.
The Financials remain number one, but they are losing
momentum and may have topped out. Interest rates are slipping some and that is
bad for the Financials. Utilities have been way up over the past week. The move is related to interest rates; with
rates falling the dividends from Utilities are a better deal. Fears of a market
pullback may have increased interest in Utilities, too.
Recommended ETF Portfolio of top 3:
1. Financial Select Sector SPDR (XLF)
2. Technology Select Sector SPDR ETF (XLK)
3. iShares U.S. Aerospace & Defense (ITA) 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.
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals turned
Negative 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
Monday, Sentiment was negative (Bullishness is at an
extreme.); Price was positive; Volume & VIX indicators were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I reduced stock percentages in my long-term account based
on short-term indicators on 1 March. There have been no long-term Buy or Sell signals
in a while. The last signal was a BUY on
23 February and the last actionable signal was a BUY (from a prior sell) on 15
November 2016.
