SENTIMENT HIGHER THAN THE DOT.COM BUBBLE (Financial
Sense)
“… some of the same patterns of optimism are appearing
[as were present in 2015 before a double digit correction], which could pose a
headwind for the stock market in the months ahead…“Overall, they’ve [Rydex
Funds have] got about $14 invested in bullish index funds for every $1 they’ve
got in inverse funds that would profit on a market decline. Just in the past
few days, that moved to an all-time record.” - Jason Goepfert
at SentimentTrader.
Posted at Financial Sense at…
My cmt: I’ve remarked on this several times recently
since I too track Rydex long/short funds.
My calculation is {Bulls/(Bulls+Bears)} and on a std deviation basis has
been rivaling the dot.com bubble for bullishness.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up a point – essentially
unchanged.
-VIX rose about 1% to 9.89, but remains historically near
extreme lows. (This is signaling extreme complacency.)
-The yield on the 10-year Treasury dropped to 2.260%. (The
Bond Ghouls are not happy. The falling rate suggests trouble for stocks if it
continues.)
My sum of 17-indicators slipped +2 on the day, down from
+7 last trading-day. Since there is a
lot of volatility in this indicator, I use a smoothed10-day average. That
number is was up from yesterday and it remains generally bullish.
Late-day action was up and that’s a bullish sign if it
continues. As of today, the longer term version of this indicator shows reason
to be concerned and remains slightly bearish.
It looks like the call is long on a short-term basis
based on the chart. Longer-term, I’m 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…
Today several ETFs are essentially tied.
I would avoid XLE; its 120-day moving average is still falling.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
I take a portion of my cash and apply it strategically to
improve returns in cash. My short-term trading has never been about get rich
quick.
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
TUESDAY 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
Tuesday, Sentiment, Price, Volume, & VIX indicators
were neutral. (VIX would be signaling BUY
now, but with VIX recently below 10 for a couple of days (May and June, and now
July), 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.
