“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“The big money is not in the buying and selling. But in the
waiting.” - Charlie Munger, Vice Chairman, Berkshire Hathaway
ADP EMPLOYMENT CHANGE (ADP via PRnewswire)
“Private sector employment increased by 749,000 jobs from
August to September according to the September ADP National Employment Report®...The report, which is derived
from ADP's actual payroll data, measures the change in total nonfarm private
employment each month on a seasonally-adjusted basis...’The labor market
continues to recover gradually," said Ahu Yildirmaz, vice president and
co-head of the ADP Research Institute. ‘In September, the majority of
sectors and company sizes experienced gains with trade, transportation and
utilities; and manufacturing leading the way. However, small businesses continued
to demonstrate slower growth.’" Press release at...
GDP-3RD ESTIMATE (CNBC/AP)
“The U.S. economy plunged at a record rate in the spring
but is poised to swing to a record increase in the quarter that is just ending.
The Commerce Department reported Wednesday that the gross
domestic product, the economy’s total output of goods and services, fell at a
rate of 31.4% in the April-June quarter...” Story at...
https://www.cnbc.com/2020/09/30/us-gdp-q2-2020.html
CHICAGO PMI (MarketWatch)
“A measure of business conditions in the Chicago region
surged in September to the highest level since the end of 2018, a stronger than
expected reading that reflects improvement in manufacturing and the resilience
of the broader U.S. economy. The Chicago PMI business barometer jumped to 62.4 in September...” Story
at...
EIA CRUDE INVENTORIES Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 2.0 million barrels from the
previous week. At 492.4 million barrels, U.S. crude oil inventories are about
13% above the five year average for this time of year.” Press release at...
http://ir.eia.gov/wpsr/wpsrsummary.pdf
SOMETHING IS LURKING (MarketWatch)
“Rosenberg [David Rosenburg, Rosenburg Research] thinks
recent stock-market choppiness should be a reason to worry. ‘Does this behavior
look normal to you?’ he asked. ‘Any reason, you think, for all this volatility?
Could it be a signal that something is lurking around the corner?... as we go
into fall and then winter, this situation can only get worse. And the market
gyrations, as at the turn of the year, are telling you get out of Dodge – as
in, de-risk.’” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website at
7:30 Wednesday. US total case numbers are on the left axis; daily numbers are
on the right side of the graph with the 10-dMA of daily numbers in Green.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.8% to 3363.
-VIX rose about 0.4% to 26.37.
-The yield on the 10-year Treasury rose to 0.689%.
I was not surprised to see a break above the 50-dMA today.
Wall Street likes to create buyers and sell to them when it can. A push above
the 50-dMA was guaranteed to find some buyers. Even with the selloff in the
afternoon, the Index still closed slightly above its 50-dMA. There may not be
much follow-thru. The Pros are selling based on late day action over the last month.
I don’t expect a bounce to be above a 50% retracement toward the old highs.
VIX was up today. Not a good sign since the S&P 500
was up nearly 1%.
The cyclical Industrials (XLI-ETF) have been outperforming
the S&P 500 for a long time. Now XLI is underperforming the Index; this
suggests knowledgeable investors are worried about further recession.
TODAY’S FACTOID
The 40-dMA of new-highs is a good trend indicator with
reasonable indications for turning points (assuming that there is not a quick
down and back move). It will lag the trend in such cases. Not much question in
the current trend signal.
As of today, the S&P 500 is down 6.1% from its
all-time high. This is day 19 of the correction. The average time from top to
bottom for a correction is 35-days for corrections less than 10% and 68-days
for bigger corrections. The 200-dMA is now 3110, 8.1% below today’s close.
The daily sum of 20 Indicators improved from -6 to -1 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations remained -25. (These numbers sometimes
change after I post the blog based on data that comes in late.) Most of these
indicators are short-term and many are trend following.
The Long Term NTSM indicator ensemble has been HOLD for
the last 4 days after a SELL before that. The Sentiment, Volume, Price and VIX
Indicators are neutral.
I remain bearish.
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)
Here’s the revised DOW 30 and its momentum analysis. 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 remained
NEGATIVE 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 30% invested in
stocks. You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance. 30% is a conservative position that I re-evaluate daily,
but it is appropriate for the correction.
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%; if this correction is deep enough, 80% would not
be out of the question.
