"U.S. private-sector employment growth eased in November
even as the manufacturing sector added the most jobs in at least 15 years, a
report by a payrolls processor showed on Wednesday. Private employers added
190,000 jobs last month, down from an unrevised 235,000 in October…” Story at…
PRODUCTIVITY (USNews)
“US
productivity jumps 3 percent in third quarter, best showing in 3 years, while
labor costs fall.” Story at…
CRUDE INVENTORIES (WSJ)
“The U.S. Energy Information Administration (EIA)
released its weekly petroleum status report Wednesday morning, showing that
U.S. commercial crude inventories decreased by 5.6 million barrels last week,
maintaining a total U.S. commercial crude inventory of 448.1 million barrels.
The commercial crude inventory remains in the upper half of the average range
for this time of year.” Story at…
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was down about 1pt to 2629.
-VIX was down about 3% to 11.02. (The Options Boys don’t
believe a correction is brewing.)
-The yield on the 10-year Treasury dipped to 2.340%.
My sum of 17 Indicators slipped from -1 to -2 on the day
and was down on a longer-term basis too. A “-” number means there are more
bearish indicators than bullish.
See yesterday’s blog for more detail, but let me add to
the negative signs:
-As I noted yesterday, “the comparison of Trend in
Breadth on the NYSE vs. trend in the S&P 500 is showing a worrisome trend:
The S&P 500 is too far ahead of Breadth. The Index vs. Breadth has not been
this unbalanced since Nov 2016, but there was only a small pullback of a couple
% back then.” Today this indicator slipped further and gave a negative signal
on the market; a decidedly bearish indicator.
-Money Trend is slipping down. I had stopped paying attention to this
indicator, but I need to pay attention now.
When Money Trend and the Index are both headed down, it is a bearish
sign until Money Trend reverses up.
-The Smart Money (based on late day action) is in
negative territory and it has turned down so it’s giving a bearish signal too. Today
was typical of market action; the market peaked around 2:30 and then fell into
the close. That’s a sign that the Pros aren’t impressed.
I don’t expect much of a pullback – probably in the 3-5%
range – but these things can get out of hand should we have some bad news. With
the Politicians rattling their cages, that’s a possibility.
All in all, I am leaning bearish in the short-term. I remain bullish longer term.
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…
Financials (XLF) was #1. The markets look a bit strained
so perhaps I’ll get a better buying opportunity. I’ll wait before adding any positions.
(I hold XLK, DVY and SPY.)
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.
Walmart (WMT) took over sole possession of #1. (I hold
Intel.)
Avoid GE and Merck. 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…
Intel is down 2% since I bought it 31 Oct 2017. This is a risk of a momentum strategy. The
hottest stock can get identified after an earnings surprise and the stock has
already moved. The momentum then slows
and profit taking follows. I am going to
hold Intel because I think buying will pick up again if they are able to keep
up earnings growth. In addition, its PE is a low 15.4 vs the average DOW PE of
25 as of the end of October. The Yield on the S&P 500 (SPY) is 1.9% while
the Dividend for Intel is 2.3%. I think it is worth holding.
SHORT-TERM TRADING PORTFOLIO - 2017 (Small-% of the total
portfolio)
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
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
Neutral on the market. (Market Internals are based on a package of internals
and all must be positive to create a positive indication.
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
Wednesday, Price indicator was positive; Sentiment, Volume & VIX
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.
