"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
Power is back on; no damage to house or boat; pine cones
and tree debris everywhere; good-by Isaias. I am tired!
FACTORY ORDERS (MarketWatch)
“U.S. factory orders rose 6.2% in June to mark the second
increase in a row, pointing to a steady rebound after widespread shutdowns in
the early stages of the pandemic.” Story at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 9:00 PM Tuesday. The US had about 70,000 new cases today. Looks like
yesterday’s low number was a fake out.
-Tuesday the S&P 500 rose about 0.4% to 3307.
-VIX dipped about 2% to 23.76.
-The yield on the 10-year Treasury was 0.513%.
The daily sum of 20 Indicators improved from -2 to
-1 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations declined from -9 to -15. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
The 40-day moving average of the percentage of new-highs
still looks weak. It is rolling over suggesting a pullback or more flat to weak
trading. The S&P 500 remains too far above its 200-dMA when Sentiment is
considered.
It sure feels like we are near a top and now we see some
cracks in the advance that may show my “feeling” is correct. It just looks like
the odds are against going more than 4-5% higher in the near term. We need to see the
Bollinger Bands and RSI both become overbought to signal a Top; otherwise, the
market can go higher. It would take a greater than 1% move up tomorrow to trigger a negative Bollinger Band signal. RSI would need several days of higher moves to signal overbought.
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 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.
