"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
PAUL SCHATZ COMMENTARY EXCERPT (Hertage Capital)
“I am recognizing that risk has increased in the stock
market, especially in the NASDAQ. In other words, the window is opening for a
potential stock market decline of some magnitude more than just a quick
pullback. I don’t think this is a September or October story. I think that if a
decline is going materialize, it should happen over the coming weeks. We now
have to be on the lookout for signs of confirmation, like the tech sector
rolling over and the other stock market indices unable to surge.” – Paul
Schatz, president Heritage Capital.
Commentary at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 7:20 PM Monday. There were about 54,000 new cases reported yesterday and
today. The data isn’t always consistent
over the weekend. (Sick people don’t go to the hospital on weekends? Reporting
is different over the weekend? I don’t know.) 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
-Monday the S&P 500 rose about 0.9% to 3252.
-VIX fell about 5% to 24.46.
-The yield on the 10-year Treasury slipped to 0.614%.
Today was one of those days when the internals were weak
while the S&P 500 rose anyway. On the NYSE, declining issues outpaced
advancing issues and declining volume was higher than advancing volume. The
bullish sign was that 113 issues made new, 52-week highs, while only 10 issues
made new-lows.
I have lots of indicators that seem to be headed down,
but they are, for the most part, still neutral or bullish.
The daily sum of 20 Indicators improved from -1 to
zero (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations declined from +27 to +22. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
All things considered; I have to be a skeptical Bull
until proven otherwise. There is still room for the Index to run higher; however,
we are getting closer to a pullback of some kind.
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…
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained 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. 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.
