“When prices have risen this high, a market crash has
always occurred.” Commentary at…
CORRECTION COMING (CNBC)
“Bank of America Merrill Lynch chief investment
strategist Michael Hartnett said the market could be heading to a significant
correction this fall.” Story at…
ANALYSIS
We’re seeing a lot of “Crash” and “Correction” stories; I
posted 2 above. It could be; but
whenever everyone thinks one thing will happen – usually, the opposite occurs.
I suspect the market will move even higher into September or October before the
correction gets underway.
The sum of my 17-Indicators is still falling sharply on a
smoothed long-term basis and has dropped into negative territory so the
indicators I track are still getting
more bearish each day.
I think at this point we have to get Bearish in the short-term; but I’ll cover
my relatively small VXX position soon. Stop is 2% loss.
Longer-term, I’m cautiously bullish; I will worry more in
late-summer (we’re almost there) and into early fall, but I remain fully
invested. There isn’t any news now that signals a bear market and long-term
indicators remain neutral. A short-term pullback seems more likely now.
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, Aerospace and Defense (ITA) was #1. 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.
I haven’t been doing much in the trading portfolio,
but I did take a short-term flyer on VXX, betting the VIX will rise soon. This
is high risk and I lost money the last time I tried this trade. With VIX near
all-time lows, the bet is a better risk now; but this trade violates the advice
below – so watch out!...small position with tight stops. If there is a big jump
higher in the VIX, forget it – we’re too late.
-“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
MONDAY 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
Monday, Price is positive; Sentiment, Volume, & VIX
indicators were neutral. (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 move up, but that might 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.
