“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
"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
FOMC MINUTES (CNBC)
“The Federal Reserve on Wednesday released the minutes from
its June 9-10 meeting, during which it held interest rates steady and said it
expects loose policy to prevail until the economy gets back to normal…In
speeches since the meeting, Fed Chairman Jerome Powell has been cautious on the
economy, saying the outlook is highly uncertain amid a recent surge in
coronavirus cases.” Story at…
ADP EMPLOYMENT CHANGE (FoxBusiness)
“Private employers 2.37 million jobs in
June as states allowed businesses shuttered by the coronavirus
outbreak to reopen and start rehiring out-of-work
Americans, according to the ADP National Employment Report released Wednesday.”
Story at…
EIA CRUDE INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 7.2 million barrels from the
previous week. At 533.5 million barrels, U.S. crude oil inventories are about
15% above the five-year average for this time of year.” Weekly Petroleum Status
Report available at…
VACCINE SHOWS PROMISE (CNBC)
“An experimental Covid-19 vaccine being developed by the
drug giant Pfizer and
the biotech firm BioNTech spurred
immune responses in healthy patients, but also caused fever and other side
effects, especially at higher doses…The vaccine generated antibodies against
SARS-CoV-2, the virus that causes Covid-19, and some of these antibodies were
neutralizing, meaning that they appear to prevent the virus from functioning.
Levels of neutralizing antibodies were 1.8- to 2.8-times the level of that in
the recovered patients.” Story at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 9:00 PM Tuesday. Over the last week, new cases have been growing faster
than they were in April. There were about 29,000 new cases today, less than
yesterday, but I got the data earlier and that tends to give lower numbers.. 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.
While we may not completely shut-down again, it seems
likely to suppress the economic recovery.
-Wednesday the S&P 500 rose about 0.5% to 3116.
-VIX dipped about 6% to 28.62.
(VIX is now lower than the day-by-day comparison to the 2009 recovery after the
March 2009 bottom. This tends to support the argument that we have seen the
final bottom of this correction and suggests further strengthening is possible.)
-The yield on the 10-year Treasury rose to 0.678%.
The market was headed for a weak opening with futures
down about a half percent this morning.
At least that was the case before the news broke about a potential
Pfizer vaccine. The market was mixed after that. The S&P 500 closed up 0.5%;
the NAZ was up 1%; the DJI was down 0.3%; and the Russel 200 was down 1%. Usually, they are reasonably consistent. The question
of the day is, “Which one is correct?”
Looking at the charts; the S&P 500 moved higher today,
so we can’t conclude there is a downtrend, at least based on the charts.
Indicators are giving weak signals, too, but the short term market internals
turned bearish.
The daily sum of 20 Indicators declined from -3 to
-4 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations declined from -46 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.
My Long-term indicator remained HOLD today; in a surprise
move, the Short-Term Indicator declined to Negative. Since Indicators are not
yet giving a short-term Buy-signal, I am still under-invested. I’ll increase stock holdings if we see some
additional improvement in signals, especially the MACD & Money Trend
indicators.
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals slipped
to NEGATIVE 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.
