LARRY ADAM COMMENTARY EXCERPT (Raymond James)
“Our recession alarm bells are not currently ‘ringing’…From
both an earnings and valuation perspective, we have maintained an overweight to
more cyclically-oriented sectors such as Information Technology and
Communication Services. Our optimism is driven by robust technology-related
fixed investment, strong dividend and buyback yields, large cash stockpiles,
and of course the debut of 5(G)! The steady adoption of 5(G) across the globe
has the potential to be a multi-year catalyst for both of these sectors in
particular…” Story at…
EXTREME DEVIATIONS (Real Investment Advice – Tues,
1/21/2020)
“This week, the market pushed those deviations even
further as the S&P 500 has now pushed into 3-standard deviation
territory above the 200-WEEK moving average…There have only been a few points
over the last 25-years where such deviations from the long-term mean were
prevalent. In every case, the extensions were met by a decline, sometimes mild,
sometimes much more extreme.” – Lance Roberts. Commentary at…
My cmt: But with the FED adding liquidity thru “repo” actions,
it remains hard to short this market. My
position was down 1.9% when I covered.
THE 5-YEAR OUTLOOK IS EXTREMELY FAVORABLE (Ciovacco
Capital)
Demographics; Demark counts, Stocks vs Bonds – end of
December signal was “full bore bullish”; Credit Scores have never been higher; Emerging
Markets have consolidated and recently broke out in Jan 2020; but wait…there’s
more! For the more, and the full video, see Chris Ciovacco’s YouTube video at…
Bottom line: “Keep and open mind to much better than
expected outcomes.”
NO CNN, BERNIE SANDERS IS NOT IN THE LEAD
(MishTalk-Global economic Trend Analysis)
“Excuse me for asking, but is there any particular reason to
believe CNN is right and 5 other pollsters wrong?” – Mish Shedlock.
Commentary at…
MARKET REPORT / ANALYSIS
-Friday the S&P 500 dropped about 0.9% to 3295.
-VIX rose about 12% to 14.56.
-The yield on the 10-year Treasury slipped to 1.686.
Today was a statistically significant down-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically-significant, down-day is followed by an up-day about
60% of the time. We could see some choppy movement before the market decides
where it wants to go. Down seems most
likely for the short-term.
Bollinger Bands and RSI are both extended, but remain in
Neutral territory. MACD of Price turned bearish today. Money Trend has turned bearish
too. Overall new-high/new-low data is good, but on a percentage basis, the % of
new-highs is falling relative to the total.
This is a bearish indicator. VIX jumped up but remains in neutral
territory. Overall, indicators declined.
The daily sum of 20 Indicators slipped from 0 to -5
(a positive number is bullish; negatives are bearish). The 10-day smoothed sum
that negates the daily fluctuations dropped from +44 to +40. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
I remain bullish in the
long-term; short-term, it looks like the dip is here, but we could still see
the Index make a run at the old highs.
The coronavirus will worry
markets until we get a better handle on its impacts.
Any pullback should be small (about 5%): the number of
new, 52-week highs has been increasing when the S&P 500 has been making
each new high. Also, the Fosback New-High/New-Low Logic Index remains much
closer to a buy than a sell.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -1
Most Recent Day with a value other than Zero: -1 on 24
January (The S&P 500 is too far above its 200-dMA when sentiment is
considered.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher is a Buy
Sign.
MOMENTUM ANALYSIS:
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
*For additional background on the ETF ranking system see
NTSM Page at…
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
-Intel (INTC) was up 8% Friday and about 15% over the
last 2 months. I’m going to wait and see if we have a dip before I jump into
INTC.
-Apple (AAPL) reports 28 January. I still own a large
position in AAPL.
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
NEUTRAL 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).
Using the Short-term indicator in 2018 in SPY would have
made a 5% gain instead of a 6% loss for buy-and-hold. The methodology was Buy
on a POSITIVE indication and Sell on a NEGATIVE indication and stay out until
the next POSITIVE indication. The back-test included 13-buys and 13-sells, or a
trade every 2-weeks on average.
My current stock allocation is about 60% invested in
stocks as of 7 Oct 2019 (up from 50%). This is a conservative balanced position
appropriate for a retiree. You may wish to have a higher or lower % invested in
stocks depending on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Friday, the PRICE, VIX, VOLUME and SENTIMENT Indicators
were neutral. Overall, the Long-Term Indicator remained HOLD.
