-Monday the S&P 500 rose about 1.1% to 2488 a new
all-time high.
-VIX was down about 12% to 10.73.
-The yield on the 10-year Treasury rose to 2.131%.
I suggested a awhile back that 2500 was a possibility. With the Index at 2488, we’re well on the
way. But there are issues.
Today was statistically significant in my system. That just means that the price-volume move up
exceeded statistical parameters that I track. The stats show that about 60% of
the time a statistically significant move up will be followed by a down day the
next day. We have a nearly overbought Bollinger Band sign and a stretched RSI
(though not yet a sell); it’s a little hard to be as short-term bullish as previously.
Some random indicators…
-Market Internals improved to positive.
-The Sum of 17-indicators flipped to positive on the day
and remains in positive territory on a 10-day basis.
-The old standby advance-decline ratio remains “overbought”
and that’s somewhat bearish.
-Late-day action was up today and the general direction improved
to neutral.
-The cyclical industrial stocks as a group (the XLI -
ETF) is outperforming the S&P 500 and that can be a bullish sign. When traders are worried, cyclicals are
usually the first sector to be sold.
Overall the short-term indicators were Bullish today.
That’s not surprising given the day was strong, but not everything was positive.
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…
Biotechnology (IBB) remained #1 today. Avoid XLE &
XLF; their 120-day moving averages are falling.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
I haven’t been doing much trading recently. I sold my SSO
(2xS&P 500 ETF) position that I established 23 July for a 3.5% gain.
-“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
switched to 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 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.
