ISM SERVICES (Advisor Perspectives)
“The headline Composite Index is at 57.4 percent, down
2.7 from 60.1 last month...
‘The NMI® registered 57.4 percent, which is 2.7
percentage points lower than the October reading of 60.1 percent. This
represents continued growth in the non-manufacturing sector at a slower rate.’”
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 0.4% to 2630.
-VIX was down about 3% to 11.33.
-The yield on the 10-year Treasury dipped to 2.358%.
My sum of 17 Indicators slipped from +9 to -1 on the day
and was down on a longer-term basis too. A “-” number means there are more bearish
indicators than bullish; further any drop is worrying since the trend is often
more important than the raw number.
-Bolllinger Bands are still elevated, but now below 80 so
it’s not a sell in my system. RSI was very close to a sell last week. Bollinger
bands and RSI when used together aren’t telling us much today – but given some
negative signs now, we might infer they were close enough last week to suggest a
pullback of some kind.
-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.
-New-Lows are picking up and the new-highs don’t look
good either.
-Advancing volume is headed down on a smoothed 10-day
basis.
-The Overbought/Oversold Index is neutral, but it too was
oversold last week. That Index can be very early though, so we’ll wait for
further indications.
-The Smart Money (based on late day action) is in
negative territory, but remains flat so its neutral.
-Every ETF I track was down today except for Technology and it was up only a smidgeon.
All in all, I am cautiously bullish in the short-term,
but we are seeing more signs that a drop may be coming soon. I thought we’d get
to mid or later December before we saw some sort of pullback. Now, I’m not sure
– indicators suggest it may be sooner.
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. XLF (Financials) look good.
(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) and Intel (INTC) were essentially tied at
#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
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals
declined to 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
Tuesday, 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.
