“The NFIB Index of Small Business
Optimism tumbled in September from 105.3 to 103 led by a steep drop in
sales expectations, not just in hurricane-affected states, but across the
country…’Small business owners across the country were measurably less
enthusiastic last month.’” Analysis at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 0.2% to 2551.
-VIX dipped about 2% to 10.08.
-The yield on the 10-year Treasury was little changed at
2.361%.
My sum of 17-Indicators remains bullish on a smoothed
long-term. Today it rose from +4 to +7. A plus number is bullish. There isn’t anything dramatic in the
indicators. Bollinger Bands are close to being overbought; RSI is high
too. Those are the most notable negative
short-term indicators.
As I’ve been saying, I think that before we see any
meaningful pullback, we need to put in a top.
At this point another 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. There’s no guarantee that there will be a big move that signals a
short-term top, but it is fairly common.
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.
Avoid XLE; its 120-day moving average is still falling.
My trade in ITA is up more than 8% in the month I’ve owned it.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
As I been saying for a while, 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
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
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, 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.
