“A day after API contributed to WTI’s reaching its
highest price level since 2015 with an estimated 5-million-barrel
draw in crude oil inventories, the EIA reinforced the
bullish mood with its own draw, and a big one, of 7.4 million barrels for the
last week of 2017.” Story at…
INTEL (CNBC)
(1)“Some of Intel's data center customers are
exploring using microchips from its rivals to build new infrastructure
after the discovery of security flaws affecting most chips” Story at…
Intel has said their chip flaw is shared by competitors
and would have no material impact on their business – but apparently investors
don’t agree. Interestingly, while AMD said their chips do not have the same
flaws (others including Intel dispute this) here’s a story from Microsoft that
says there are problems with AMD chips that haven’t been solved.
(2)“Microsoft said it had suspended patches to guard
against Meltdown and Spectre security threats for computers running AMD
chipsets.” Story at…
https://www.cnbc.com/2018/01/09/microsoft-halts-some-amd-chip-meltdown-patches-after-pcs-freeze.html
Overall, the big problem for Intel is that the issue will
cause the biggest hit to the Intel server business where they have enjoyed a
near monopoly. I was busy all day (out), but it’s time to sell. My gut feeling is that Intel is at risk for
another 10% loss…too much for me.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 was up about 0.2% to 2748.
-VIX was up about 3% to 9.52.
-The yield on the 10-year Treasury rose to 2.488%.
Only 2 of the ETFs that I track – Financials (XLF) and
Nasdaq Biotech (IBB) – were up today. This doesn’t seem to be a healthy sign,
but over the last 10-days, 70% of the ETFs have been up, so it is too early to
get worked up. Further, a number of
signs that have been bearish have improved recently: Sentiment; Bollinger
bands; and the RSI; Overbought/Oversold ratio are no longer giving sell
signals. This doesn’t mean we are out of
the woods, but it may postpone a pullback.
My sum of 17 Indicators improved from +3 to +5 today. On
a 10-day basis, values are still falling. A “+” number means that most
indicators are bullish.
I am bearish short-term; longer term I am a bull, but I
recommend caution with the Fed raising rates and shrinking its balance sheet. In
addition, we are due for a correction in 2018 due to Presidential election
cycle history.
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.
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’m waiting for a better entry point before adding other
positions.
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…
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 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.
