“Manufacturing activity in the U.S. Midwest unexpectedly
strengthened to its strongest level in three years in October...The Chicago
Purchasing Management Index rose to 66.2 from
65.2 in September. It was the highest level since October 2014…” Story at…
CONSUMER CONFIDENCE (Conference Board)
“Consumer confidence increased to its highest level in
almost 17 years in October after remaining relatively flat
in September,” said Lynn Franco, Director of Economic Indicators at The
Conference Board. “Consumers’ assessment of current conditions improved,
boosted by the job market which had not received such favorable ratings since
the summer of 2001.” Press release at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 0.1% to 2575.
-VIX was down about 3% to 10.18.
-The yield on the 10-year Treasury rose to 2.375%.
My Sum of 17 Indicators dropped from -2 to -6. This is subject to a lot of daily swings so I
use a smoothed 10-day value for this indicator.
My 10-day indicator is still falling sharply and that remains bearish.
See Friday’s blog post for my thoughts on the Markets –
they haven’t changed. Indicators are deteriorating. We’ll see if they keep
headed down.
A pullback in the range of 3-5% would be the norm.
Perhaps we’ll finally see a bigger (10% or more move down), but that is
anybody’s guess at this point. The
numbers suggest down; but the magnitude is unknown.
Short-term I am still leaning bearish and I made a
bearish VXX buy Friday. It’s a risky
move as I noted several times, but with VIX below 10 and other bearish
indicators I think it is a reasonable bet.
I’ll have a low tolerance for loss and I’ll sell quickly if this trade
moves against me.
I remain bullish longer-term. One wonders when this party
will end so I will worry if the numbers deteriorate, but for now I remain fully
invested.
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…
Technology (XLK) was #1; Aerospace and Defense (ITA) remained
#2 today and Financials (XLF) weren’t far behind. I am in ITA as of 21 Sept. I
plan to sell tomorrow unless ITA puts on a big move up.
I thought it would be interesting to apply the ETF
ranking system methodology to the Dow 30.
The quick way to do it was to keep the number of stocks the same as my
ETF ranking system so here is a ranking of 15 DOW stocks.
TODAY’S RANKING OF 15 DOW STOCKS (Ranked Daily)
The top ranked ETF receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF. Avoid GE, Merck and Disney. Their 120-day
moving averages are falling.
Intel (INTC) remained #1 today. I have owned Intel for
some time.
*I rank the Dow 15 similarly to the ETF ranking system.
For more details, see NTSM Page at…
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
As noted Friday I did take a short-term VXX position on
27 Oct very near the close. This violates the rules below, but I am eternally
hopeful.
My shorting rule is as follows:
-“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, VIX & Volume indicators were neutral. With VIX recently below 10
for a couple of days in May, June, July, August, September and now October, 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.
