“Oil prices rose on Wednesday after U.S. government data
showed a decline in domestic crude inventories and strong refining activity in
the world's largest oil consumer, ahead of next week's meeting of major oil
producers.” Story at…
REAL REASON FOR DECLINE? (Mishtalk Blog)
“The DOW fell over 372 points, the VIX volatility index
jumped 46%, gold was up $23, the dollar fell, and treasury yields sank across
the board. The media attributed this to Trump. Speculations regarding
possible impeachment hearings soared. Realistically speaking, however,
impeachment odds are near zero. So what spooked the market?” Commentary at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dropped about 1.8% to 2357.
-VIX jumped up about 46% to 15.59 at the close.
-The yield on the 10-year Treasury dropped to 2.227%.
I have been saying for a while that the Market can’t seem
to make up its mind. Well, it made up its mind today! The Bears were growling.
Today’s close was the poster child for poor Late Day
Action as the Index dropped all afternoon. The Smart Money bailed today and the
closing tick was a huge –633 …Ugly, ugly day, especially the close.
Today’s action blew up all the indicators and Bearish
signs abound:
-My Sum of 17–indicators dropped from +3 to -5. That’s a big daily swing and, as we have
noted for some time, the 10-day value is still headed sharply down.
-Money Trend switched to bearish again.
-Market Internals switched to negative (from neutral) today.
-New-lows outpaced new-highs giving us a Negative Spread –
that’s definitely bearish.
-Industrial Cyclical stocks (XLI-ETF) are underperforming
the S&P 500, but not drastically. Cyclicals tend to be the canary in the
coal mine when investors get nervous.
There were some bull signs:
-The Index dropped all the way down to its lower Bollinger
Band and it wouldn’t take too many further declines to give us an “oversold”
reading.
-RSI was 34. 30 is
“oversold” so we could see some buying pressure soon if the Index continues
down.
-The 5-10-20 Timer System remains “buy”, but just barely.
(The 5-dEMA & 10-dEMA are both above the 20-dEMA.)
Today was a statistically significant (big) down-day and
that is usually followed by an up-day the next day. With the move as big as it
was today, some follow-thru down is possible - seems like there was some panic
today - surprise-surprise…markets can go down too.
The Index closed 0.5% below its 50-dMA. I’d expect a test
of the 13 April low of 2329. The 200-dMA is 2255 and that’s a possible stop too
if the 13 April low doesn’t hold.
Overall, the bears seem to be in control, but that doesn’t
mean that there couldn’t be a quick turn-around and move up. It’s not the most likely scenario, but it could happen. We’ll
have a better idea in a couple of days.
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…
Today, Utilities (XLU) ETF was the only winner of the 15-ETFs
I track. That’s typical – the Pros use XLU for safety in times of trouble. XLK (Technology) and IWM (Small Caps) were
the big losers – looks like profit taking to me. The S&P 500 is still outperforming
Utilities (over the last 2-months) and that suggests (at this point) that there
may not be much of a down-turn.
Technology (XLK) remains No 1 & I continue to hold
the XLK. (In a downturn XLK and IWM would probably be among the poorer
performers.)
I would avoid XLE; its 120-day moving average is falling.
“At each
major market peak throughout history, there has always been something that
became “the” subject of speculative investment. Rather it was railroads, real estate, emerging markets,
technology stocks or tulip bulbs, the end result was always the same as the
rush to get into those markets also led to the rush to get out. Today, the rush to
buy “ETF’s” has clearly taken that mantle…” – Lance Roberts. Commentary at…
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
No positions. Let’s watch the market for confirmation, up
or down.
-“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.
I haven’t done well in my short positions over the past
6-months; conversely, I have a good record in long positions.
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
to 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
Wednesday, Price; Sentiment, Volume & VIX indicators
were neutral. (With VIX recently below
10, VIX may be prone to incorrect signals. Usually, a rising VIX is a bad
market sign; now it may just signal normalization of VIX, i.e., VIX and the
Index may both rise. As an indicator, VIX is out of the picture for a while.)
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, but I consider it fully invested.
