“The number of Americans filing for unemployment benefits
rose more than expected last week, suggesting that claims processing disrupted
by recent hurricanes has begun to improve. Initial claims for state
unemployment benefits increased 10,000 to a seasonally adjusted 239,000 for the
week ended Nov. 4…” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.4% to 2585.
-VIX was up about 7% to 10.5.
-The yield on the 10-year Treasury rose to 2.324%.
Indicators are mixed.
Without going thru the entire list, I’ll recap a few of the important
signals.
Breadth (the % of stocks advancing on the NYSE) were down
today, but still above 50% and that’s a mildly bullish indicator. The Smart Money
Indicator, based on late-day action, is turning up and is now bullish.
The sum of 17-indicators dropped from +2 to -2 on the
day. (A negative number indicates that
more indicators are bearish.) Yesterday it looked like the indicators might be
rolling over to positive on a smoothed basis. That didn’t happen; they’re still
headed down sharply.
Comparing the Cyclical Industrials (XLI-ETF) to the
S&P 500 shows cyclicals are being sold relative to the Index on every time
frame I track. They’ve been trending down,
but now they are solidly bearish. If investors are nervous, they sell
cyclicals.
New-High/New-Low data remains bearish and got worse
today. One of the more interesting ways of looking at this data is to track the
smaller value of either the new-highs or the new-lows. An indicator based on
this data, the FOSBACK NEW-HIGH/NEW-LOW LOGIC INDEX named for Norm Fosback the
developer, is getting more bearish. Though it is not yet giving a bear signal,
both new highs and new lows are starting to put up bigger numbers. That divergence is not a healthy sign for the
markets. The short-term indicator has not been as high as it is now since
August of 2015, during a 12% correction.
The indicator is not yet calling for a correction, but it is worth
watching.
I’m still cautious and lean toward some downside ahead.
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) was #1. It‘s time to buy XLK, especially
if we get a dip. It is interesting to see that Energy stocks (XLE) have moved
up strongly recently and are now #3.
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, Merck 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
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, 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.
