Profitable Investing Stock Market Update for the week ending 11/17/2017
Stock Market Sector Strength Analysis
As stock market trading continued after GE’s bombshell announcement – Honey, I shrunk the company! Broader sector strength weakness continued to develop.
The VTI or Total Market Index still shows strong on the sector summary chart. However, a quick glance at the sector strength detail page shows that the broad market is perilously close to a yellow status.
Of significance the S&P500 has sunk into a neutral situation. Demand for S&P 500 stocks has certainly dropped this week.
The balance of the 10 sectors show a score of 3/1/5:
- 3 Green
- 1 Yellow
- 5 Red
Weakening sector strength is certainly an ominous sign. Aggressive defensive steps have been taken to protect the model portfolio by moving all stop-loss & profit-keeper price levels up.
See this weeks model portfolio update for details.
Stock Market Notable Events
I used to call Motorola the incredible shrinking company.
As of Monday, the Shrinking Company Crown resides firmly on GE’s head. On Monday GE cut its coveted dividend in half – to 12c from 24c per share . That really hurts for buy-and-hold investors who rely on that income. Add to that pain the decrease in share price this year of 37% so far.
GE also announced it was selling a multitude of business, including the light bulb business that it had been in for 125 years! I can’t recall a time when GE was on our watchlist so readers should have never taken a risk with this now shrinking company.
Stock Market Earnings
No new broad market earnings update this week.
Stock Market Technical Analysis
In contrast to the sector strength analysis, the Advance/Decline line is at the lower point of its trendline, and it appears to be moving upwards once again. This is a positive for stock prices in general.
The Advance/Decline line indicates broad support for stock prices.
Continued increase in this stock market measure might help sector strength return to positive.
The New Highs – New Lows are showing at recent highs. Over the last few days this indicator was falling.
However, Friday’s action showed an increase in New Highs.
Just like the Advance/Decline line, this measure of broad market action might help the sector strength improve.
Profitable Investing Posture for the Upcoming Week
Based on deteriorating sector strength the stop-loss and profit-keeper price levels were adjusted upward in the model portfolio.
It is fully expected that some of the model portfolio positions will be sold regardless of the overall stock market performance in the near term.
This is expected and is part of managing risk both at the position & portfolio level.
However, there are some substantial profits held in the portfolio and taking some potions off the table is not anticipated to be troublesome this late in a bull market.
Click this link to view the model portfolio, sell price levels, and all position profits.
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