“New applications for U.S. jobless benefits unexpectedly
fell last week and the number of Americans on unemployment rolls tumbled to a
28-1/2-year low, pointing to rapidly shrinking labor market slack….Initial
claims for state unemployment benefits decreased 4,000 to a seasonally adjusted
232,000 for the week ended May 13…” Story at….
PHILLY FED (MarketWatch)
“Manufacturing in the Philadelphia region showed
unexpected strength in May, according to data released Thursday, a sign that
the factory sector could be on solid ground. The Philadelphia Fed said its manufacturing index jumped to
a reading of 38.8 in May from 22 in April.” Story at…
LEI (Conference Board)
“The Conference Board Leading Economic
Index® (LEI)for the U.S. increased 0.3 percent in April to 126.9 (2010 =
100), following a 0.3 percent increase in March, and a 0.5 percent increase in
February. “The recent trend in the U.S. LEI, led by the positive outlook of
consumers and financial markets, continues to point to a growing economy,
perhaps even a cyclical pickup,” said Ataman Ozyildirim, Director of Business
Cycles and Growth Research at The Conference Board.” Press release at…
WALL STREET JOURNAL HEADLINE (WSJ)
“This year has been the least volatile since 1965.”
That’s a little scary since a major Bear market began in 1966 and lasted until
1982.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.4% to 2366.
-VIX dropped about 6% to 14.66 at the close.
-The yield on the 10-year Treasury rose to 2.231%.
There was no follow-thru down after yesterday’s selloff;
but some of the day’s stats raised a cautionary flag. 51% of stocks on the NYSE
were up today – that’s OK – but only 47% of the volume was up and new-lows (80)
outpaced new-highs (39). Overall today’s numbers lean towards bearish. There
was a lot of Late-day selling as the Index dropped about 10pts after 2:30pm so
the Pros didn’t want to stay long today.
My sum of 17-indicators continued down and remains in
negative territory. Most indicators are now pointing down.
On a 10-day basis breadth did pick up a bit today and
50.1% of stocks have been up over the last 10-days.
Overall, it still seems like the bears may be in control,
but as I noted yesterday, that doesn’t mean that there couldn’t be a quick
turn-around and a move up (blowing my opinion on the bears). A test of the recent low of 2329 would help
us make a decision. We may 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…
Technology (XLK) slipped to No 2 & the Schwab
Emerging Market ETF (SCHE) moved into 1st place. Let’s wait a bit
and see if it remains there. There isn’t
that much difference in momentum. XLK is outperforming the SCHE over the last
2-months on %-gained basis. I continue
to hold the XLK although I may take profits Friday. (In a downturn XLK and IWM
would probably be among the poorer performers.) I would avoid XLE; its 120-day
moving average is falling.
In general, odd things can happen to the ETFs during a
correction; all turn equally bad as the markets decline.
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.
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to Neutral on the market because 10-day Breadth popped above 50%..
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
Thursday, Price is positive; 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.
