"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
EMPIRE STATE MANUFACTURING (MarketWatch)
“The New York Fed’s Empire State business conditions
index fell 13.5 points to 3.7 in August, signaling a slower pace of growth, the regional Fed bank said Monday. Economists had
expected a reading of 17, according to a survey by Econoday.” Story at…
NEVADA - 1 IN 5 BALLOTS NOT DELIVERED (Business Insider)
“New proponents of mail balloting don't often understand
how it actually works," Public Interest Legal Foundation President J.
Christian Adams said in a statement. "States like Oregon and Washington spent many
years building their mail voting systems and are notably aggressive with voter
list maintenance efforts…Oregon and Washington have held elections entirely by
mail for years, but the June primary was Nevada's first election conducted
fully through the mail because of concerns around the coronavirus pandemic.
However, 93,585 voters listed as 'active' never had the chance to vote, as the
USPS returned their ballots to the election commission saying they were
undeliverable, the report shows.” Story
at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:30 Monday. Total US numbers are on the left axis. I’ve plotted the daily
numbers on the right side of the graph with a 10-dMA of daily numbers in Green.
Today’s number looks wrong, but it will be corrected tomorrow if it is. If
it’s correct, it would be a good sign since it shows a drastically lower number
of new cases – I doubt that it is correct.
-Monday the S&P 500 rose about 0.3% 3382.
-VIX slipped about 3% to 21.34.
-The yield on the 10-year Treasury dipped to 0.692%.
Some indicators are drifting down: Money Trend turned
negative; RSI switched to “overbought” (Bollinger Bands are not); the MACD of
Breadth continues to get more bearish; Smart Money (late-day-action) is now
falling, bearish. The elephant in the room (“%-above-the-200-day” indicator)
continues to deteriorate; the S&P 500 is now 10.3% above its 200-dMA. Values
in the 10-15% range are sell-signal. While this could signal a major top, it
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.
In addition to the other bearish signs, we now have a bearish,
rising wedge-pattern in the S&P 500.
Stockcharts.com says, “The Rising Wedge is a bearish pattern that begins
wide at the bottom and contracts as prices move higher and the trading range
narrows. In contrast to symmetrical triangles, which have no
definitive slope and no bullish or bearish bias,
rising wedges definitely slope up and have a bearish bias.” From…
The daily sum of 20 Indicators declined from +7 to +1 (a positive
number is bullish; negatives are bearish). The 10-day smoothed sum that smooths
the daily fluctuations improved from +60 to +63. (These numbers sometimes
change after I post the blog based on data that comes in late.) Most of these
indicators are short-term.
It looks like we are due for a pullback soon, but it
could take longer than I expect. The one wild card is the Fed. Can they hold off normal market action? Have
they ended all corrections? We’ll see.
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…
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.
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.
