“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
PPI (Reuters)
“‘The prices of some producer prices are climbing, but
factories are not back to normal yet,’ said Chris Rupkey, chief economist at
MUFG in New York. “’Fed officials will remain cautious on the inflation outlook
until producer price pressures heat up further.’ The producer price index for
final demand rose 0.4% last month after advancing 0.3% in August.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website at
6:15pm 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 slipped about 0.7% to 3489.
-VIX rose about 1% to 26.40.
-The yield on the 10-year Treasury remained 0.731%.
I should point out that the correction that started 2
September is not officially over. We
need to see the S&P 500 take out its old high of 3581 to put an end to it.
So, from a correction viewpoint, the Index retraced 86% of its drop, as of 12
Oct., and has slipped back since then. The correction is now 29 days old. Top
to Bottom, the avg correction under 10% lasts about 35 days; the avg correction
greater than 10% lasts 68 days, excluding major, 50%-crashes.
If this correction has ended (and we won’t know it has
until we take out the old highs), the drop from top to bottom was 9.6% and it lasted
14-days. That’s short, but stranger things have happened, especially given that
the FED has launched its massive intervention. Since we are seeing some top-indicators
again, it is very possible that the correction will pick up again, leading to
lower lows, rather than taking out the old high.
Top indicators:
-The S&P 500 is 11.8% above its 200-dMA. (Sell point
is 12%.) When Sentiment is considered, the signal is bearish.
-Breadth, stocks advancing on the NYSE, vs the S&P
500 index is bearish. The Index is too far ahead of advancing stocks.
- Bollinger Bands were overbought 2 days ago; now they
are neutral.
-RSI was very nearly overbought yesterday.
I’d like to see more top-indicators to call an end to the
rally, but that’s what we have. I think we have seen the end to the rally, but
the markets may make another try at prior highs.
The daily sum of 20 Indicators slipped from +6 to +1 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from +59 to +61. (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 14 days after a SELL before that. The Volume indicator is positive;
Sentiment and Price Indicators are neutral. VIX is bearish.
The Index is 2.8% above its 50-dMA (3394) so the Bulls
will need to see that level hold if the downtrend is to end.
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 NEUTRAL.
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, 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.
