“Payroll processor ADP said Thursday the private sector
added 250,000 jobs in December, possibly heralding a third straight month
of strong gains in the government’s closely watched employment survey.” Story
at…
JOBLESS CLAIMS (NASDAQ.com)
“The report said initial jobless claims edged up to
250,000, an increase of 3,000 from the previous week's revised level of
247,000…’The bottom line is that claims remain at an unusually low level,
providing more evidence of labor market strength’….” Story at…
http://www.nasdaq.com/article/us-weekly-jobless-claims-unexpectedly-inch-up-to-250000-20180104-00599
CRUDE INVENTORIES (oilPrice.com)
“The American Petroleum Institute (API) reported a draw
of 4.992 million barrels of United States crude oil inventories for the week
ending December 29, marking five large draws in as many weeks.” Story at…
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was up about 0.4% to 2724.
-VIX was down about 1% to 9.22.
-The yield on the 10-year Treasury rose slightly to 2.454%.
Some topping indicators remain stretched and today Bollinger
Bands signaled “overbought”, a sell signal for this indicator. I like to use this
with RSI which is not yet overbought. The S&P 500 is 9.5% above its 200-day
moving average. (Sell signal would be in the 10-15% range.)
The simplest topping indicator is to count the number of days
that are up in a given time period. Looking at the last 20-days only 12-days
have been up and that is a benign number that is not warning of a top.
My sum of 17 Indicators improved from +0 to +5 today. On
a 10-day basis, values dipped a little. A “+” number means that most indicators
are bullish.
I am neutral short-term; longer term I am a bull, but I
recommend caution with the Fed raising rates and shrinking its balance sheet. Historically,
we are due for a correction in 2018 due to the Presidential election cycle.
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…
Energy (XLE) was #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.)
Under my system in 2017, Technology (XLK) was ranked in
the top 3 Momentum Plays for 52% of all trading days in 2017 (if I counted
correctly.) XLK was up 35% on the year. Its weighted Average PE is 23.7.
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 remained #1.
I hold Intel – I’m waiting for a better entry point
before adding other positions. Intel slipped
to #6 based on Intel’s perceived problems. Intel was down more than 3%
Wednesday on reports that its chips contained serious security flaws and others
did not. Intel made the following statement later Wednesday:
“Intel is committed to product and customer security and is working
closely with many other technology companies, including AMD, ARM Holdings and
several operating system vendors, to develop an industry-wide approach to
resolve this issue promptly and constructively. Intel and other vendors had
planned to disclose this issue next week when more software and firmware
updates will be available.”
From Intel’s statement this appears to be a much wider
problem that is not confined only to Intel. They further stated that there was no material impact on Intel's business.
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…
THURSDAY 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
Thursday, Price indicator was positive; Sentiment was negative;
Volume & VIX indicators were neutral. With VIX recently below 10 for a couple of
days each month from May thru December 2017, and now January 2018, 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. 6-months with VIX below 10 is
unprecedented in the last 20-years.
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.
