“Most members of the Federal Open Markets Committee
believe that they should start shrinking the Fed's $4.5 trillion balance
sheet later this year, according to minutes from their mid-March
meeting…The minutes also showed that some officials viewed stock prices as
being "quite high”. Story at…
My cmt: Excerpt from the minutes: “…With respect to the economic outlook and
its implications for monetary policy, members continued to expect that, with
gradual adjustments in the stance of monetary policy, economic activity would
expand at a moderate pace and labor market conditions would strengthen somewhat
further.” Markets peaked around 1:30 and slowly declined after the 2PM release
of the minutes.
ADP EMPLOYMENT (USA Today)
“Businesses added 263,000 jobs in March, payroll
processor ADP said Wednesday, possibly heralding a third straight month of
strong hiring in the government’s closely watched employment report later this
week.” Story at…
ISM SERVICES (Reuters)
“The U.S. economy's service sector expanded in March but
at its slowest pace since October, according to an industry report released on
Wednesday. The Institute for Supply Management (ISM) said its index of non-manufacturing
activity fell to 55.2…” Story at…
CRUDE INVENTORIES (MarketWatch)
“Oil futures pared gains Wednesday after data showed an
unexpected rise in U.S. crude inventories last week. The Energy Information
Administration said inventories rose by 1.6 million barrels.” Story at…
EARNINGS GROWTH (Factset)
“For Q1 2017, the estimated earnings growth rate for the
S&P 500 is 9.1%. If 9.1% is the actual growth rate for the quarter, it will
mark the highest (year-over-year) earnings growth for the index since Q4 2011
(11.6%).” Earnings Insight at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 0.3% to 2353.
-VIX jumped about 9% to 11.79
-The yield on the 10-year Treasury dipped to 2.34%.
I was out in the afternoon and returned to find the
S&P 500 tanking late in the day. It had been comfortably higher all morning.
Top to bottom the Index dropped nearly 1.5% in about 2-hours after the FOMC
minutes were released. Traders were
selling the news. That puts the Index at the lower trend line and about 0.4%
above its 50-day Moving Average (50-dMA). The 200-dMA is currently 2219 or 6%
below today’s close. That’s the risk. A
break below the 50-day could bring on some steep selling down to the
200-dMA. That’s not a prediction – I don’t
know where this thing is going. We had
some positive signs at the previous low of 2342 so we’ll have to see what
happens if the S&P 500 breaks lower.
My Sum of 16-Indicators remained unchanged at 0 today.
Longer term it is flat. That’s now neutral based on the unchanged condition. RSI
was 35 (14-day, SMA). The “oversold” value
is 30 so RSI is suggesting this downturn may be over soon.
The Advance-Decline Ratio (a measure of breadth) is again
“overbought” at today’s close, a bearish signal. XLI is underperforming the
S&P 500 and cyclical stocks usually lead the Index and that’s bearish too.
Bottom line: We’ll need to see what happens in the next
day or two to have a better idea of the future.
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…
Utilities (XLU) was the only ETF up on the day. I would
avoid iEAFE (Europe and Far East) & Energy (XLE); currently their 120-dMAs
are declining.
1. Technology Select Sector SPDR ETF (XLK) remains the
top ranked ETF.
(I took positions in XLF and XLK Wednesday, 29 March.) My
guess is that XLF will rebound after a correction as the interest rates rise.
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.
I closed short-term long positions Wednesday on a snap
decision when I saw how the Index traded down late in the day. It’s probably an
overreaction, but the chart looked ugly.
- Rydex S&P 500 2x Strategy. Established 3/28/2017.
SOLD 5 Apr 2017
- 2x S&P 500 ETF (SSO). Established 3/28/2017. SOLD 5
Apr 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.
WEDNESDAY 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
Wednesday, Price, Sentiment, 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 50-dMA.
