“Sales of new U.S. single-family homes fell for a second
straight month in January, weighed down by steep declines in the Northeast and South,
which could raise concerns the housing market is losing momentum.” Story at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 1.2% to 2780.
-VIX was DOWN about 4% to 15.80.
-The yield on the 10-year Treasury was little changed at
2.864%.
This correction has been recovering so fast that not all
of the troubling signs we noted at the end of January have been fixed. What do I mean? Let’s list a few: (1) The
S&P 500 is now 8.8% above the 200-dMA.
(Tops often occur in the 10-15% range.) (2) Breadth (advance-decline
line) vs. the S&P 500 shows that the Index has been rising faster than the
# of advancing stocks. (This is also close to giving a warning sign.) (3) Smart
money (late-day-action) is still headed down over the last 10-days. (4) Breadth
(the % of stocks advancing over the last 10-days) is overbought at 61%. In 2010,
the correction started with breadth at 60%. (5) New-highs are still falling on
a longer-term basis. This is all concerning, but there have been bullish signs
too. I noted a few yesterday. Here are more…
Today, my sum of 17 Indicators increased from +4 to +6
today. Positive numbers are bullish since this is just a sum of positive and
negative indicators. The smoothed version has turned up and is very bullish. The
Index broke above its 50-dMA and has remained above the 50-dMA for two days.
Market Internals are positive today, a bullish indication.
I reduced stock holdings on 31 Jan at S&P 500 2824. The
Index has retraced 68% of its loss since then. That’s above the 61.8% Fibonacci
Retracement. Another 3% increase in the S&P 500 and I’ll have a round-trip.
It is very possible that this rally could still fail and
retrace to the prior bottom. The retest we saw on 8 Feb was at a higher volume
than the prior 5 Feb low. To me that suggests that selling wasn’t done – yet here
we are still rapidly climbing. I am holding my nose to buy. (Mr. Market doesn’t
always pay attention to my indicators.)
As noted in yesterday’s blog, I’ll be buying stocks. I plan
to raise my investment in stocks to 50% of my total portfolio. For me that is
fully invested. The trick is to be nimble and recognize this market could still
go south.
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%. 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 while the S&P 500 was up 18%.
*For additional background on the ETF ranking system see
NTSM Page at…
XLY is the Consumer Discretionary ETF. Charles Schwab
just rated the Consumer Discretionary sector as “Market Perform”. They said, “The
outlook for American consumer spending appears to us to be solid, with consumer
confidence strong, a tight labor market and wages trending higher. However,
spending on traditional retail items has been cautious and competition among
retailers may limit profitability.” More at…
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.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to Positive on the market.
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
Monday, VIX was
negative; Volume was positive; Sentiment and Price were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I plan to
increase stock holdings to 50%. (A comparable TSP allocation would be 50% in
the S&P 500 Index fund (C-Fund) with the remainder 50% G-Fund (Government
securities). This is a conservative retiree position.
