“The number of Americans filing new applications for
unemployment benefits rose for the second straight week, but remained near
historically low levels. Initial jobless claims, a proxy for layoffs across the
U.S., increased 10,000 to a seasonally adjusted 249,000 in the week ended Nov.
11…” Story at…
PHILLY FED (RTTnews)
“Growth in Philadelphia-area manufacturing activity
slowed by more than expected in the month of November, according to a report
released by the Federal Reserve Bank of Philadelphia on Thursday… its diffusion
index for current manufacturing activity in the region dropped to 22.7 in
November…” Story at…
My cmt: A number above zero indicates expansion so
manufacturing is still growing – just at a slower rate.
INDUSTRIAL PRODUCTION (Reuters)
“U.S. industrial production recorded its biggest increase
in six months in October as the drag from hurricane-related disruptions
unwound, but the underlying growth trend in output at the nation’s factories,
mines and utility plants remained moderate.” Story at…
HIGH DOWNSIDE RISK or “Would you Rather be a Bear.” (Real
Investment Advice)
“I see downside market risk at about four times the
upside reward. I don’t believe stocks are a buy on a minor dip — a view adopted
by most. Given the outlook that there is outsize risk, I have been steadily
expanding my large net short exposure.” – Doug Kass, President of Seabreeze
Partners Management, Inc. Commentary at….
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.8% to 2586.
-VIX was down about 10% to 11.76.
-The yield on the 10-year Treasury rose to 2.373%.
The move down yesterday in the S&P 500 was
statistically significant (in my system) based on the standard deviation of the
price-volume when compared to recent history (after the final volume data was
tabulated last night). That was followed by another statistically significant up-day
today. That means that tomorrow (Friday)
is likely to be down about 60% of the time. I think we may see some more buying
for another day or two, but we shall see. Overall, I think conditions remain
negative enough to warrant a bearish prediction in the short run. More dip
buyers were bound to move in and we saw that today and it is indicated in
the Sentiment readings.
Sentiment (measured as %-Bulls [Bulls/{bulls+bears}]
based on the amounts invested in Rydex/Guggenheim mutual funds) is now 83%
bulls. That’s a very high number that is
cause for concern though it is not yet a “sell”. The dippers may drive it into
sell territory soon if they keep buying.
Market Internals improved to neutral today based on
improvements in the new-high/new-low data, but the sum of 17-indicators
continues down and the late day action was mostly down indicating hesitation by
traders to bet that the dip is over. Over the last 2-weeks the trend has
been “late-day selling”.
I remain bearish short-term. At this point, it still looks
like we’ll see some downside ahead, but one is never sure these days. The
markets have defied the shorts for some time.
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) remained #1. Utilities (XLU) was
#3. That isn’t a great sign for the
markets. Utilities are often a
safe-haven during market stress.
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
Intel (INTC) remained #1 today. I have owned Intel for
some time – I bought more Halloween, 10/31/2017. Avoid GE, IBM, Merck, United
Technologies, Verizon and Disney. Their 120-day moving averages are falling.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the
total portfolio)
LONG
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. I am still holding this 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 were
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,
October and now November, 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.
