"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
JOLTS (BLS/Advisor Perspectives)
“The number of hires increased by 2.4 million to a series
high of 6.5 million in May, the U.S. Bureau of Labor Statistics reported today.
This was the largest monthly increase of hires since the series began. Total
separations decreased by 5.8 million to 4.1 million, the single largest
decrease since the series began…Over the 12 months ending in May, hires totaled
68.5 million and separations totaled 79.8 million, yielding a net employment loss of 11.3 million. These
totals include workers who may have been hired and separated more than once during the year.” Press
release at…
Analysis and charts from Advisor Perspectives at…
DEATH OF FUNDAMENTALS (RIA)
“Over the last quarter, the “Death of Fundamentals” has
become apparent as investors ignore earnings to chase market momentum. However,
throughout history, such large divergences between fundamentals and price have
resulted in low future returns. This time is unlikely to be different.” Commentary at…
STOCKS WILL GO SIDEWAYS FOR A YEAR – CITI (Reuters)
“World stocks will probably tread water for a year,
according to Citi (C.N)
strategists, who recommend a more defensive portfolio in the face of the
fallout from the coronavirus pandemic. Citi equity strategists are recommending
clients play it safe by holding U.S. stocks and healthcare shares and reducing
exposure to bank shares, as earnings are likely to take a while to recover from
the coronavirus fallout.” Story at…
My cmt: This makes a lot of sense, especially when
looking at the Covid curve below.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:00 PM Tuesday. Over the last week, new cases have been growing faster
than they were in April. There were about 55,000 new cases today, a lot more
than yesterday. 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.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dropped about 1.1% to 3145.
-VIX rose about 5% to 9.43.
-The yield on the 10-year Treasury dropped to 0.646%.
The daily sum of 20 Indicators declined from +5 to
-3 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations remained -39 (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, but just
barely; the Short-Term Indicator declined to NEUTRAL. Both MACD of Breadth and
Price look like they will turn bullish soon. I had planned to increase stock
holdings on weakness. I didn’t today, but perhaps later this week if we can see
some further declines, but there was a surprising indication in my long-term
indicator.
The Price indicator is already bearish. Today, VIX
reversed upward giving a warning of a possible sell-signal. If both are bearish,
the long-term indicator would give a sell signal. In that case I’ll be selling, not buying. My
long-term system does not issue sell-signals often. It signaled SELL on 24 Feb,
3 days after the top of the recent coronavirus crash. I respect it.
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. I’m watching the Long-Term indicator that is close to issuing a SELL
signal.
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.
