FOMC RATE DECISION (CNBC)
“The Federal Reserve approved its second rate hike of
2017 even amid expectations that inflation is running well below the central
bank's target…Federal Open Market Committee increased its benchmark target a
quarter point. The new range will be 1 percent to 1.25 percent for a rate that
currently is 0.91 percent.” Story at…
CPI / RETAIL SALES (Reuters)
“U.S. consumer prices unexpectedly fell in May and retail
sales recorded their biggest drop in 16 months, suggesting a softening in
domestic demand that could limit the Federal Reserve's ability to continue
raising interest rates this year.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped about 0.1% to 2437.
-VIX rose about 2% to 10.64.
-The yield on the 10-year Treasury rose to 2.135%.
There was a new-high Tuesday but only 4.1% of stocks on
the NYSE made a 52-week new high. That’s
a weak number that reflects the narrow advance of this market. There aren’t
enough stocks participating. Nothing new here though, this has been typical for
this advance for several years. That’s one reason I was previously bearish. It
turns out that while this stat shows that the market is not healthy, it is not a good
topping indicator.
The Advance Decline Ratio is signaling “overbought”. The sum of 17 indicators remains in positive
territory and Money trend is bullish too. Late day action (the Smart Money) is
headed down and that’s bearish - lots of mixed signals. I remain unimpressed on
a short-term basis.
Longer term, I remain cautiously bullish; I will worry
more in late-summer and into early fall.
TODAY’S 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) remains No. 1, but a number of the ETFs
are close. This tends to happen during
corrections; investors get confused and the ETFs flatten out as leadership
fails. I am not calling a correction
here; but the ETF ranking system is hinting at problems.
I would avoid XLE; its 120-day moving average is
falling.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
Neutral with no positions recommended. - 5/24/2017
thru present.
I am still not bullish enough to take a long position in
the trading portfolio.
-“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.
-“Commandment #1: “Thou Shall Not Trade Against the Trend.” - James P. Arthur Huprich
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remain
positive 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, Volume, Sentiment & 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 for my situation.
