The U.S. goods trade deficit increased in July as exports
fell, suggesting that trade would make a modest contribution to economic growth
in the third quarter…the goods trade gap increased 1.7 percent. The
Commerce Department also reported on Monday that wholesale inventories
increased 0.4 percent in July … Despite July's soft inventory data, economists
remained optimistic that inventory investment would contribute to growth in the
third quarter.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up a point to 2444.
-VIX rose about 0.4% to 11.32.
-The yield on the 10-year Treasury slipped to 2.156%.
(The Bond Ghouls are buying and that can be a bearish sign for stocks.)
The more bullish indicators are:
-Up volume is still improving and has been positive on a
smoothed 10-day basis for the last 4 days.
- The Sum of 17 Indicators remains positive.
- The Market Internals are positive on the market.
Not everything looks good…
Utilities are now outperforming the S&P 500 by a
pretty good margin and that can be a negative for stocks.
Overall the short-term indicators I track remain bullish,
but less so today. The market could always turn down again so we’ll need to pay
attention.
Longer-term, I’m cautiously bullish; I will worry more if
the numbers deteriorate, but I remain fully invested. There isn’t any news now
that signals a bear market and long-term indicators remain neutral.
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…
Emerging Markets (SCHE) remained #1 today. Of the 15-ETFs
I track only 4 were down on the day and one of them was ITA. ITA moved into
first on 3 August. Its run appears to be over.
Avoid XLE; its 120-day moving averages is falling.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
-“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
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
Monday, Price,
Sentiment, VIX & Volume indicators were neutral. With VIX recently
below 10 for a couple of days (May, June,
July and now August), 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.
