Blogger has changed its format so I am still learning the new system.
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
"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
JOBLESS CLAIMS (CNBC)
“Weekly jobless claims hit their lowest level of the
pandemic area, totaling 1.186 million last week, well below Wall Street
expectations…Continuing claims, or those who have collected benefits for two
straight weeks, dropped by 844,000 to 16.1 million.” Story at…
https://www.cnbc.com/2020/08/06/weekly-jobless-claims.html
JOHN HUSSMAN COMMENTARY EXCERPT (Hussman Funds)
“Here and now, market conditions feature 1) historically
extreme valuations, 2) unfavorable dispersion in our measures of market
internals, and 3) unusually “overvalued, overbought, overbullish” conditions.
That combination holds us to a hard-negative market outlook, but it’s also a
flexible outlook. Our measures of market internals are close enough to
“borderline” that we would not plan to “fight” a material market advance if it
occurs.
Instead, if market internals were to improve, our
near-term view would likely become more neutral, and could even become
constructive under certain conditions – with a safety net of course…Presently,
our estimate of likely 12-year S&P 500 nominal total returns is negative,
and is 2% below the near-zero yield on Treasury bonds.” John Hussman, Phd.
Commentary at…
https://www.hussmanfunds.com/comment/mc200730/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:30 PM Thursday. The US had about 63,000 new cases today.
MARKET REPORT / ANALYSIS
Thursday the S&P 500 rose about 0.6% to 3349.
-VIX dipped about 1% to 22.65.
(The falling VIX is giving a buy signal.)
-The yield on the 10-year Treasury slipped to 0.540%.
Bollinger Bands signaled overbought
today, but RSI did not. I consider these
two indicators together so for now, we may not have a top signal. Unchanged volume was very high today. Some
feel that when the NYSE volume is high for stocks sold without a change in
price, it signals investor confusion and a possible turning point. I’ve tried to develop an indicator based on
this without much success. Sometimes it’s
true; sometimes not.
The S&P 500 is 9.6% above its 200-dMA. Values in the
10-15% range are sell signal. While this could be 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.
When we add sentiment to the equation, this indicator is
already suggesting the Index is too far ahead of itself.
The daily sum of 20 Indicators slipped from +6 to
+5 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations remained -14. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term.
Looks like some sort of pullback is getting closer.
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
THURSDAY 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.
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.
