“Just as a reminder of previous market bubbles, here is what
they looked like.” - Lance Roberts
Chart from…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 0.1% to 2681.
-VIX was up about 4% to 10.25.
-The yield on the 10-year Treasury was down slightly to
2.470%.
My sum of 17 Indicators remained at +6. As has been the
case for a while, there was continued strong improvement on a 10-day basis. A
“+” number means that most indicators are bullish – perhaps too bullish. There
are a couple of topping indicators that are stretched and one or two that are Bearish.
No point is getting carried away with details. Volume was about half the norm for the last
month on the NYSE. Overall volumes will remain low over the Holiday period so
it is hard to put too much faith in the indicators.
In the near term I am mildly bullish; longer term I am a
bull, but I recommend caution with the Fed raising rates and shrinking its
balance sheet. This party could end sometime in 2018.
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%. Every Tech stock on the Dow 30 slipped today so
it is no wonder that XLK has slipped to #4.
*For additional background on the ETF ranking system see
NTSM Page at…
Financials (XLF) were #1. The markets are due for some
reversion so perhaps I’ll get a better buying opportunity later. I’ll wait before adding any positions. (I
hold XLK, DVY and SPY. DVY is a dividend play. SPY is a good core holding.)
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.
Caterpillar was #1. (I hold Intel – I’m waiting for a better
entry point before adding other positions.)
Avoid GE, IBM 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…
TUESDAY 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. This Neutral reading
may be the result of low volume overall since low volume makes up-volume low
even if up-volume outpaces down volume.)
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, Price indicator was positive; Sentiment, Volume & VIX
indicators were neutral. Price was too positive; it is so high that it is now a
worrisome sign. I would not be surprised to see some selling in January. With VIX recently below 10 for a couple of
days in May, June, July, August, September, October, November and now December,
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. VIX below 10 last occurred about 4-months before the year
2007 crash and also several months before the 2001 crash.
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.
