"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
CONSUMER PRICE INDEX (MarketWatch)
“The cost of consumer goods and services rose in June for
the first time in four months largely because of higher gasoline and food
prices, but inflation more broadly remained low and is likely to stay that way
during the pandemic. The consumer price index jumped 0.6% last month…core CPI,
rose a smaller 0.2% in June.” Story at…
EMPIRE STATE MANUFATURING (Advisor Perspecties)
“Business activity steadied in New York State, according
to firms responding to the June 2020 Empire State Manufacturing Survey. After
breaching record lows in April and May, the headline general business
conditions index climbed forty-eight points to -0.2…” Story at…
INDUSTRIAL PRODUCTION (Marketwatch)
“Industrial production rose by 1.4% in May, as many factories
resumed operations after shutdowns spurred by the coronavirus crisis, the
Federal Reserve said Tuesday.” Story at…
EIA CRUDE INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 5.7 million barrels from the
previous week. At 539.2 million barrels, U.S. crude oil inventories are about
18% above the five-year average for this time of year.” Press release at…
US OPPOSES CHINA IN SOUTH CHINA SEA (CNBC)
“The United States champions a free and open
Indo-Pacific,” U.S. Secretary of State Mike Pompeo said Monday in an online statement on the State Department’s website.
“Today we are strengthening U.S. policy in a vital, contentious part of that
region — the South China Sea. We are making clear: Beijing’s claims to offshore
resources across most of the South China Sea are completely unlawful, as is its
campaign of bullying to control them.”
My cmt: I thought that President Obama’s choice to allow
China to build islands in international waters without any objection by the U.S.
was reckless back when it happened. This disputed area is nowhere near mainland
China. My guess is that Biden would do nothing about it, if he was elected.
“Although the international tribunal at The Hague ruled
unanimously against China’s claim to most of the disputed territory, the
tribunal has no means to enforce its ruling.”
SQUIRREL HAS BUBONIC PLAGUE (CNBC)
“A squirrel in Colorado has tested positive for the
bubonic plague, also known as the “Black Death,” according to local health authorities.”
Story at…
My cmt: Good heavens! Don’t we have enough to worry
about. The Governor has announced that all squirrels in Colorado will now be
required to wear flea collars.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:20 PM Tuesday. There were about 61,000 new cases today. The steepening curve is the graphic
indication that new-cases are growing at a dramatically faster rate than we
have seen at any time in the US…and they continue to accelerate.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was up about 1.4% to 3198.
-VIX fell about 8% to 32.19.
-The yield on the 10-year Treasury rose to 0.626%.
When FED President Robert Kaplan said yesterday that the
economy was slowing, the markets dropped more than 2%. I didn’t expect a huge up-day like we got
today.
It looks like the market is shaking off the bad news, but
the big up-day could have been caused by short covering, so a down day is
slightly more likely tomorrow.
Yesterday was the 6th “Distribution Day” in
the last 6-weeks and that’s a bear sign.
VIX came down, but didn’t give a buy signal – it remains
neutral.
The size of up-moves vs down-moves (previously indicating
sell) shows that the size of up-moves has been smaller than the size of
down-moves over the last month, but the indicator remains in neutral territory.
Unless it declines again, this bearish sign is over.
I have very few negative indicators, so if we’re going to
see another big drop it is likely to be news related, i.e., impossible to time.
The daily sum of 20 Indicators declined from +4 to
+1 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations improved from +4 to +6. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most of
these indicators are short-term.
My Long-term indicator remained HOLD today.
It seems like every time I get ready to buy more stocks,
there is some sort of market shake-up. Once again, I’ll wait for the Short-Term
or Long-term indicator to give a buy signal before I add to stock holdings, assuming we can avoid major sell
signals.
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.
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 declined
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 40% invested in
stocks. You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance. 40% is a conservative position that I re-evaluate daily.
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.
