“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.” Story at…
INDUSTRIAL PRODUCTION (MarketWatch)
“U.S. industrial production rose 0.4% in August, a much
smaller gain than in the prior two months, the Federal
Reserve reported Tuesday... Manufacturing output rose 1% in August
but the gains for most manufacturing industries have gradually slowed since
June, the Fed said.” Story at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website at
7:30 Tuesday. Total US 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
-Tuesday the S&P 500 rose about 0.5% to 3401.
-VIX fell about 1% to 25.59
-The yield on the 10-year Treasury dipped slightly to
0.673%.
This bounce looks like it may go longer. Sooner or later
we’ll have to drop again, since we haven’t resolved many of the overbought
signals yet. The Index is 9.7% above its 200-dMA. When sentiment is factored
in, we still have a bearish sign. Still, indicators improved a lot.
The daily sum of 20 Indicators improved from -8 to +3 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from -36 to -35. (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.
As of today, the S&P 500 is down 5% from its all-time
high. This is day 8 of the correction (if we are still in correction mode). 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 Long Term NTSM indicator ensemble remained SELL.
Volume, Price and the Panic Indicator are bearish. It has been SELL for the
last 6 days.
The 5-10-20 Timer System remains negative because both
the 5-dEMA and the 10-dEMA are below the 20-dEMA.
I remain bearish in the short and intermediate term, but
it’s possible that the Index may make new highs. I had planned to cover my short
position on the S&P 500, but I got wrapped up late in the day and didn’t. I’ll probably regret that, but I’ll cover
tomorrow unless we see a big down-day.
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)
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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
to BULLISH 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 very conservative position that I
re-evaluate daily. The XLE has been a loser for me since I was too early. It is
still yielding over 10%, so I have to remind myself to be patient.
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.
