“Economic activity in the manufacturing sector grew
in August, with the overall economy notching a fourth
consecutive month of growth, say the nation's supply executives in the
latest Manufacturing ISM® Report On Business®…The August PMI® registered
56 percent, up 1.8 percentage points from the July reading of 54.2 percent.
This figure indicates expansion in the overall economy for the fourth
month in a row after a contraction in April, which ended a period of 131
consecutive months of growth.” Story at…
CONSTRUCTION SPENDING (Seattle Times)
"U.S. construction spending edged up a tiny 0.1% in July,
breaking a string of losses due to disruptions caused by the coronavirus
pandemic.” Story at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 8:45 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.
-Tuesday the S&P 500 slipped about 0.8% to 3527.
-VIX slipped about 1% to 26.12.
-The yield on the 10-year Treasury slipped to 0.675%.
Apparently, the stock market is never going to go down again.
Or, as frequently mentioned by Pros, when trying to short an irrational market,
“markets can stay irrational longer than anyone can stay solvent fighting it.”
Irrational? Are you kidding me? The VIX is above 25 and the S&P 500 made a
new high? That’s irrational with a capital “I”. Don’t ask me to explain it – I
can’t.
Today was a statistically-significant, up-day. That just
means that the price-volume move exceeded my statistical parameters. Analysis
shows that a statistically-significant, up-day is followed by a down-day about
60% of the time.
Statistically-significant, up-days almost always coincide with tops, but
not all statistically-significant, up-days occur at tops. I’ve called a top
several times recently. I won’t bother this time. I don’t think it is – the irrational
will continue, until it doesn’t.
Today the S&P
500 is 14.2% above its 200-dMA. Values in the 10-15% range are sell-signal. RSI
remained overbought.
The daily sum of 20 Indicators remained from +2 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from +3 to +6. (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, i.e., they are
not top-indicators, so they are not as bearish as one might expect.
I remain bearish in the short and intermediate term. I
have a very small Short-position.
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.
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.
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.
