“Economic activity grew at a measured pace across the
country in September and October, despite sector-wide disruptions caused by
recent hurricanes in the Southern and Eastern U.S., according to a new report
from the Federal Reserve.” Story at…
HOUSING (Reuters)
“U.S. homebuilding fell to a one-year low in September as
Hurricanes Harvey and Irma disrupted the construction of single-family homes in
the South, suggesting housing probably remained a drag on economic growth in
the third quarter... Housing starts decreased 4.7 percent…” Story at…
CRUDE INVENTORIES
“…the EIA…calculated an inventory decline of 5.7 million
barrels for the week to October 13. At 456.5 million barrels, the authority
said, crude oil inventories were within the upper limit of the seasonal
average, and they have been within these limits for more than a month now,
which should serve to quench—to some extent—worries about an oversupply
situation.” Story at…
There was more than a 7 million-barrel draw on
inventories.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 0.1% to 2561.
-VIX dipped about 2% to 10.07.
-The yield on the 10-year Treasury rose 2.341%.
The markets are still hinting they may drift down. Advancing
volume continues to fall. My sum of 17-Indicators remained zero (neutral) on
the day and it is rolling over to the downside. Closing Tick finally ticked
down. Today’s closing tick (sum of final trades of the day) was +31 – probably a
neutral reading.
Short-term we appear to be due for about a 3-5% dip, and
indicators are trending in that direction, but indicators are not currently in
negative territory, so there’s no smoking gun. Historically, a “correction” is
due in 2018 since that is the second term of the new President at least if you
believe in seasonality predictions.
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.
Another broken-record report. (Does anyone under 30 get
that reference?) If the report looks similar to recent ones, it’s because there
has been little change in indicators recently.
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) remained #1 today. I am in
ITA as of 21 Sept.
My trade in ITA is up 2.5% in the month I’ve owned it.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
Repeating again…and again… and again…
It is tempting to make a VXX trade if and when we get a
big move up signaling a short-term top.
VIX is at extreme lows. VXX would be a bet against the market and higher
VIX – essentially a short. This is a
risky trade since as VIX options expire, they must be replaced with more
expensive options (referred to as contango).
For this reason, VXX will lose value even if VIX stays the same. I need
a really good set-up before I’ll trade VXX or short. I am not there yet.
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
WEDNESDAY 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
Wednesday, the
Price indicator was positive; Sentiment, 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.
