The number of Americans filing for unemployment benefits
increased less than expected last week, suggesting the labor market continued
to tighten after recent hurricane-related disruptions…Initial claims for state
unemployment benefits increased 10,000 to a seasonally adjusted 233,000 for the
week ended Oct. 21…” Story at…
KANSAS CITY FED (People’s Pundit Daily)
“The Kansas City Federal Reserve Bank said their gauge of
manufacturing activity in the Tenth District came in at 23 in October, stronger
than the 17 median forecast…“Factory activity accelerated further in our region
this month, posting its highest composite reading since 2011,” said Chad
Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas
City.” Story at…
REAL DURABLE GOODS ORDERS (Advisor
Perspectives)
“As these charts illustrate, when we study durable goods
orders in the larger context of population growth and also adjust for
inflation, the data becomes a coincident macro-indicator of a major shift in
demand within the U.S. economy. It correlates with a decline in real household
incomes, as illustrated in our analysis of the most recent Census Bureau
household income data…” Charts and analysis at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.1% to 2560.
-VIX was up about 0.6% to 11.30.
-The yield on the 10-year Treasury increased to 2.465%.
My Sum of 17-Indicators rose from -2 to 0. Longer term
the Indicators are falling sharply. Indicators are not much different than
yesterday, but there are a couple of changes:
-Up-volume moved up on a 10-day basis. That’s a bullish change.
-The Smart Money Indicator (based on late day action)
turned down after a positive day yesterday.
Looks like the Pro trend is still selling after turning up for only 1-day.
I noted yesterday that “we may see a short-term dip in
the 3-5% range. Earnings will play a part in investor psychology. Google,
Amazon, Intel all report tomorrow albeit after the close, so they’ll set the
tone for Friday.” How did they do?
“Four of the most valuable tech companies in the
world—Amazon.com Inc., Google parent company Alphabet Inc., Microsoft Corp. and
Intel Corp. — destroyed expectations for profit and revenue in
third-quarter reports Thursday afternoon, collectively bringing in about $2.2
billion more profit and $19 billion more revenue than the same quarter a year
ago.” Story at…
This may be enough to avoid a pullback for a bit longer.
Short-term I am still leaning bearish, but 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…
Aerospace and Defense (ITA) remained #1 today. I am in
ITA as of 21 Sept.
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.
Caterpillar (CAT) remained #1.
*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
We didn’t get a good signal on the Top. Looks like I’ve
missed the opportunity to short (or buy the VIX) because the signal wasn’t very
strong Friday. It’s still possible we might get a signal to take a short-term
VXX position.
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
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals
switched to 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
Thursday,
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.
