ADP EMPLOYMENT (MarketWatch)
“Private-sector companies shed a whopping 20.2 million
jobs in April as many were forced to shutter during a nationwide shutdown to
slow the coronavirus, underscoring the biggest crisis for American workers and
the U.S. labor market in nearly a century.” Story at…
CRUDE INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 4.6 million barrels from the
previous week. At 532.2 million barrels, U.S. crude oil inventories are about
12% above the five-year average for this time of year.” Press release available
at…
EU PREDICTS HISTORIC RECESSION (MarketWatch)
“The European Union predicted Wednesday “a recession of
historic proportions this year” due to the impact of the coronavirus as it
released its first official estimates of the damage the pandemic is inflicting
on the bloc’s economy…the [European] commission’s assumption less than three
months ago was “that the outbreak peaks in the first quarter, with relatively
limited global spillovers.” Story at…
My cmt: We note that the EU was caught flat-footed by the
virus too. That’s not a criticism; this event was very difficult to forecast.
It wasn’t helped by the Chinese Communists who concealed the emergence of a new
Coronavirus and put doctors in prison when they tried to publicize it. They
also expelled US journalists who were reporting the news from China. While I
don’t think the virus was manmade, I am suspicious that it may have escaped
from a lab in Wuhan. If it didn’t, why were
the commies trying to cover it up?
CORONAVIRUS TIMELINE UPENDED (WSJ)
“French doctors have discovered a case of the new
coronavirus dating from late December in a man who was
hospitalized near Paris, the earliest publicly identified Covid-19 infection
outside China. The case, in a man with no history of travel to China, changes
the timeline of the pandemic…” Story at…
My comment: “with no history of travel to China” suggests
European, community-transmission in December, a shocking find.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:50 PM. Nationwide, there were about 24,000 new-cases today, about 5,000
more than yesterday. (I sometimes up-date the data later in the evening and
that may make some of today’s stats seem odd compared to what I may have
written yesterday.)
The 5-day growth-rate was 1.05, i.e., average new cases
are increasing at a rate of 5% per day over the last 5-days. The 10-day growth
rate was 1.03. 1.1 is considered the growth rate for pandemic growth. At least
we have slipped below that level. At the end of March, new cases were growing 25%
each day or doubling every 3-days – we’ve made a lot of progress, even while
the NY Times claims otherwise.
These numbers are based on U.S. totals; local data will
be different.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell about 0.7% to 2848.
-VIX rose about 2% to 34.12.
-The yield on the 10-year Treasury rose to 0.705.
RESISTANCE POINTS:
61.8% Fibonacci Retracement: 2950
200-dMA: about 3004
The Prior all-time High: 3386
There are some bear signs:
-MACD of price looks like we may soon see a bearish
crossover. During this pullback, MACD called the sell 2-days after the top; it
called a buy 3-days after the bottom. So
far, the MACD of S&P 500 price indicator has done well. It is not yet
bearish.
-Breadth vs. the S&P 500 is moving toward a bearish
divergence, but it’s not a sell yet.
-Money Trend has turned down again.
-Smart Money was down again today. This indicator has been
pointing down for a while.
-As we look at the chart of the Index, we see that the
Index was crawling along its lower trendline and broke lower today. Multiple
closes below trend would be concerning.
-5-day Rate of Change (ROC) of VIX popped above zero today.
Tom McClellan noted: “...An upward crossing through zero often
(but not always) marks an important top for stock prices.”
The above collection of indicators is leaning bearish, but we
need to see confirmation. That will come
with more bearish moves of these indicators, or possibly, more bear signs from other
indicators. At this point, we can’t say
that it’s time to sell the rally – it may be getting close though.
The daily sum of 20 Indicators slipped from +6 to
+5 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that negates the daily fluctuations improved from +50 to +51. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
Last Wednesday’s closing (29 April) S&P 500 level of
2940 represented a retracement of 61% from the prior low back toward the
all-time high. 57% retracement (2890) is the average for this type of rally;
52% is the median. The rally has lasted 31 days; the average length of a
counter-trend rally after a 15% waterfall decline is 21 days. The median is 11 days. (Of course, it is
possible that the rally ended 29 April at day 26 of the rally with the S&P
500 at 2940. That day was statistically-significant in volume and price
in my system and that occurs at tops. Statistically-significant days also occur
on days that aren’t tops.)
The Index is currently down 15.9% from its all-time high.
Today is day 54 of the correction. Corrections greater than 10% last (on
average) 68 days, top to bottom. Crashes are significantly longer; I am not
sure if this is a crash yet. I’ll be surprised if this is over in 3-weeks.
Indicators seem to be confirming my slightly bearish lean,
but it will take a bit more time to see where those indicators go; the Smart
Money indicator is often correct. Can we get higher than the previous rally
high of 2940? We’ll see.
RECENT STOCK PURCHASES
Of purchases near the recent low, I still own:
-Biotech ETF (IBB). #1 in momentum. We’re in a health
crisis so perhaps this will be a good longer-term hold too. Gilead is the
largest holding in the IBB-ETF.
-XLK. Technology ETF spreads some risk and gives exposure
to Microsoft, Cisco, etc.; was #1 in momentum in the ETFs I track before the
crisis.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: +0**
Most Recent Day with a value other than Zero: +0 on 6 May.
(Non-Crash Sentiment is bullish; and Smart Money is bearish.)
(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)
The top ranked ETF receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF. The highest ranked are those closest to zero.
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…
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.
For more details, see NTSM Page at…
WEDNESDAY 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 45% invested in
stocks. You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Wednesday, the SENTIMENT, PRICE, VOLUME & VIX indicators
are bullish. This just means conditions are good – it may be too late to buy,
although I have been wrong before.
The 5-10-20 Timer System remained bullish, because the
5-dEMA and the 10-dEMA climbed above the 20-dEMA. This is a good indicator on
its own.
The long-term
indicator remained BUY. I may bump p stock holdings to 50%, but I will
wait for a better entry point, before getting less defensive.
