"This imaginary person out there - Mr. Market - he's
kind of a drunken psycho. Some days he gets very enthused, some days he gets
very depressed. And when he gets really enthused, you sell to him and if he
gets depressed you buy from him. There's no moral taint attached to that."
- Warren
Buffett
“The big money is not in the buying and selling. But in the
waiting.” - Charlie Munger, Vice Chairman, Berkshire Hathaway
JOB OPENINGS JOLTS (CNBC)
“Job openings fell to
just over 5 million in April, the lowest total since December 2014.
The Labor Department’s
JOLTS report showed that separations fell sharply month over month to 9.9
million, about 5 million less than March.” Story at…
SMALL BUSINESS OPTIMISM (ABA Banking Journal)
“The NFIB Small Business Optimism Index rose 3.5 points
in May to 94.4, a strong improvement from April’s 90.9 reading. Owners
are optimistic about future business conditions and expect the recession to be
short-lived as the country re-opens.” Story at…
STOCKS SET FOR A DECLINE (Seeking Alpha)
“Ben Casselman tells us in New York
Times: ‘The Labor Department cautioned that data-collection issues
troubling the agency throughout the crisis continued last month. Some
temporarily jobless workers were characterized as employed in May; had they been
counted correctly, the department said, the unemployment rate would have topped
16 percent.’ Maybe the unemployment rate did not fall in May!...
…You just don’t fully know or understand what is “out
there” that you are going to have to deal with at some time in the future…Now,
investors need to get back to reality, a reality where they have to deal with a
lot of unknown, unknowns.” Commentary at…
My cmt: Ruh-roh…can you say, “Buyer’s Remorse?”
50-YEAR VETERAN SAYS “BULL MARKET” (MarketWatch)
“Jeffrey Saut…brings nearly 50 years of experience and has
been sticking to his bullish stock call for years. In our call of the day, he
predicts a new high for the S&P by year-end, with one message for any
jittery investors: “It’s a bull market.”…“I think we’re working up to a
near-term trading peak in mid-June, but it could be that it doesn’t really pull
back and just consolidates and goes sideways, and you get another leg up to
make new all-time highs,” he says, adding that those new highs will likely
arrive by December." Story at...
My cmt: Now I feel better! Jeff Saut is my favorite market
guru. I met him once in St Petersburg, Florida.
Very nice fellow.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:30 PM. There were 18,000 new cases about 2,000 less than yesterday. While
the curve has flattened, indicating slowed growth, we can see that the curve is
not diverging from the dashed line, an indication that the growth rate is
little changed over the last month.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dropped about 0.8% to 3207.
-VIX rose about 7% to 27.57.
-The yield on the 10-year Treasury slipped to 0.829%.
For the last 2 weeks we’ve seen higher than normal
volume. Friday’s and Monday’s volume were both 50% above the monthly average.
Today, volume was only about 10% above the norm for the month. So, no huge
panic selling today. However, for the day, internals were very weak. Down-volume was 8x up-volume and advancing stocks
outpaced decliners 4 to 1. Not encouraging, but not surprising. It will take
more than a day to shake the bullish view.
A pullback would not be unexpected; a retreat to the lows would be
disappointing, but one day does not make a trend.
The daily sum of 20 Indicators declined from +12
to +9 (a positive number is bullish; negatives are bearish). The 10-day
smoothed sum that negates the daily fluctuations improved from +94 to +98. (These numbers sometimes change after I post the blog
based on data that comes in late.) Most of these indicators are short-term.
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)
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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals dipped
to 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 50% invested in
stocks. You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance. As a retiree, 50% in the stock market is about fully
invested for me – it is a cautious and conservative number. If I feel very
confident, I might go to 60%; had we seen a successful retest of the bottom,
80% would not have been out of the question.
