“U.S. homebuilding fell for a second straight month in
August as a rebound in the construction of single-family houses was offset by
persistent weakness in the volatile multifamily home segment.”
Permits were at an all-time high, but single-family
permits dropped.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.1% to 2507.
-VIX was up about 0.3% to 10.18.
-The yield on the 10-year Treasury rose to 2.247%.
Market Internals remain in pretty good shape. Advancing
volume is still headed up and the Smart Money remains bullish. (This reflects
late day action and that is considered to be an indication of what the Pros are
doing.) New-high/new-low data still looks good and may actually get out of its
malaise.
RSI is close to oversold as is the Bollinger Band
indicator, but neither are currently in sell mode so let’s call this one
neutral.
Overall the short-term indicators are Bullish Tuesday,
even with some cracks showing.
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…
Aerospace and Defense (ITA) moved into #1 today. Biotechnology
(IBB) slipped to #2. I usually wait a day or two to make a change, but IBB
moved into 1st based on a strong move in the last 4 days of August. Since then it hasn’t done much and I’m down
1.5% so I’ll sell IBB Wednesday.
Avoid XLE; its 120-day moving average 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
TUESDAY 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
Tuesday, Price was
positive. Sentiment, VIX & Volume indicators were neutral. With VIX
recently below 10 for a couple of days (May, June, July and 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) 24 March
2017 in my long-term accounts, based on short-term indicators. The remainder
is 50% G-Fund (Government securities). This is a conservative retiree
allocation, but I consider it fully invested for my situation.
The previous signal was a BUY on 2 June and the last
actionable signal was a BUY (from a prior sell) on 15 November 2016.
