“The Institute for Supply Management's manufacturing
survey index out Monday jumped to a 13-year high of
60.8 from August's robust 58.8, as the factory sector seemed to
get an extra lift from hurricane rebuilding.” Story at…
CONSTRUCTION SPENDING (Reuters)
“A measure of U.S. manufacturing activity surged to a
near 13-1/2-year high in September as disruptions to the supply chains caused
by Hurricanes Harvey and Irma resulted in factories taking longer to deliver
goods and boosted raw material prices.” Story at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 0.4% to 2529,
another new high.
-VIX slipped about 1% to 9.45.
-The yield on the 10-year Treasury rose to 2.350%.
My sum of 17 indicators was up to +7 on the day from +4 Friday.
My smoothed version of the 10-day version of this indicator is still bullish. RSI
and Bollinger Bands are both close to “overbought” but not yet there. (RSI was overbought
last Thursday but it has retreated since then and is now at 75.)
As I noted last week, I think the next big move up, say
around 1%, could mark another short-term top. From there a retreat of some
kind, probably in the 3-5% range, is probable.
I’ve been writing for a while that “there isn’t any news
now that signals a bear market.” That’s true – there isn’t any news that is
surprising the market, but there are some topping signs. VIX & Margin Debt
are 2 that jump out. Margin Debt is again at all-time highs. When it peaks, it suggests extreme Bullishness
and that’s a bearish indicator.
I’ve previously pointed out that VIX below 10 has preceded
the 2 prior crashes (2001, 2007) by about 6-months. Does that mean another
crash is coming? The indicator doesn’t have enough data points to make that conclusion,
but it is a concern. Low VIX indicates
extreme complacency. A shock to the system, bad news or otherwise, would likely
result in a rapid descent of some sort.
I remain bullish longer-term. One wonders when this party
will end so I will worry if the numbers deteriorate, but 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…
Aerospace and Defense (ITA) remained #1 today. I am in
ITA as of 21 Sept.
Avoid XLE; its 120-day moving average is still 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 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
Monday, 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 and
September, 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.
