"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
JOBLESS CLAIMS (Reuters)
“The number of Americans filing for unemployment benefits
unexpectedly rose last week for the first time in nearly four months,
suggesting the labor market was stalling amid a resurgence in new COVID-19
cases and depressed demand…Initial claims for state unemployment benefits
increased 109,000 to a seasonally adjusted 1.416 million for the week ended
July 18.” Story at…
LEI (Conference Board)
“The Conference Board Leading Economic Index® (LEI)
for the U.S. increased 2.0 percent in June to 102.0 (2016=100), following a 3.2
percent increase in May and a 6.3 percent decrease in April. “The June increase
in the LEI reflects improvements brought about by the incremental reopening of
the economy, with labor market conditions and stock prices in particular
contributing positively,” said Ataman Ozyildirim, Senior Director of Economic
Research at The Conference Board. “However, broader financial conditions and
the consumers’ outlook on business conditions still point to a weak economic outlook.
Together with a resurgence of new COVID-19 cases across much of the nation, the
LEI suggests that the US economy will remain in recession territory in the near
term.” Press release at…
IF THAT WAS A BUBBLE – WHAT’S THIS? (Felder Report)
“Just three stocks, Apple, Amazon and Microsoft, make up
more than 16% of the S&P 500 Index and over a third of the Nasdaq 100
Index…What is really most astounding, though, is the aggregate valuation of
these three behemoths relative to their free cash flow. Only at the peak of the
Dotcom Mania have we see anything like it…”
Chart and commentary from…
CORONAVIRUS ANTI BODIES LAST MERE MONTHS (Business
Insider)
“With some diseases, like measles and hepatitis A,
infection is a one-and-done deal. Once you get sick and recover, you're immune
for life. For human coronaviruses, that's not the case,"
Florian Krammer, a vaccinologist at the Icahn School of Medicine at Mount
Sinai, told Business Insider. "You can get repeatedly infected once your
immunity goes down." Increasingly, research is starting to coalesce around
the idea that people who develop coronavirus antibodies might not keep them for
very long. New research published in
the New England Journal of Medicine suggests antibody levels
plummet during the first three months after a person is infected, decreasing by
half every 36 days.” Story at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 6:00 PM Thursday. There were about 85,000 new cases reported today, near
the daily record for new cases. The 14-day growth factor was 1.09, indicating 9%
growth in new cases each day over the last 2-weeks. So much for falling
numbers.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.2% to 3236.
-VIX jumped about 7% to 26.08.
-The yield on the 10-year Treasury slipped to 0.585%.
Some indicators got worse; some got better. Other than price, today was a wash as far as
most indicators go. The daily sum of 20 Indicators remained +5 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from +33 to +37. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
Today was a statistically significant down-day. That just
means that the price-volume move down exceeded my statistical parameters.
Statistics show that a statistically-significant, down-day is followed by an
up-day about 60% of the time. Further, the S&P 500 closed on its lower
trend-line. If this level doesn’t hold, we may be looking at a drop to the
50-dMA (3096) or the 200-dMA (3040). Could it be greater? Sure, but for now we can
look at the nearest support levels. The 100-dMA is lower at 2911.
Let’s see what happens tomorrow.
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.
*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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to POSITIVE 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. It is not far below my fully invested position which would be between
50-60%.
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.
