"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
ADP EMPLOYMENT (CNBC)
“The move to get displaced workers back to their jobs
slowed sharply in July, with private payrolls increasing by just 167,000, ADP
reported Wednesday. That total was well below the 1 million expected from
economists…” Story at…
ISM NON-MANUFACTURING (MarketWatch)
“American manufacturers expanded in July for the third
month in a row, but senior executives say production remains well below
pre-pandemic levels and not all the jobs are coming back soon. The Institute for Supply Management said its manufacturing index rose to
54.2% from 52.6% in June…” Story at…
EIA CRUDE INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 7.4 million barrels from the
previous week. At 518.6 million barrels, U.S. crude oil inventories are about
16% above the five year average for this time of year.” Story at…
http://ir.eia.gov/wpsr/wpsrsummary.pdf
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:40 PM Wednesday. The US had about 37,000 new cases today. This is lower
than the trend and we see that in the flattening curve. It may be due to
getting the data late yesterday and getting it early today. That will even out and we’ll see where this
trend goes.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.6% to 3328.
-VIX dipped about 3% to 22.99. (The
falling VIX is giving a buy signal.)
-The yield on the 10-year Treasury rose to 0.555%.
The daily sum of 20 Indicators improved from -1 to
+6 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations improved from -15 to -14. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
The S&P 500 is 9% above its 200-dMA. Values in the
10-15% range are sell signal, although this is not an indication of a major top
and could presage just a 3-5% pullback. The Index was 11.5% above its 200-day
when the Coronavirus crash began. It was 8.6% above its 200-day before the 6%
retreat in July of 2019.
When we add sentiment to the equation, this indicator is
already suggesting the Index is too far ahead of itself.
Other indicators are getting more positive, but that’s
just exuberance showing up in the trend following 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.
*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
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…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
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.
