“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
NFIB SMALL BUSINESS OPTIMISM INDEX
“The NFIB Optimism Index rose 3.8 points to 104.0 in September,
a historically high reading. Nine of the 10 Index components improved and one
declined. The NFIB Uncertainty Index increased 2 points to 92, up from 75 in
April.
‘As parts of the country continue to open, small
businesses are seeing some improvements in foot traffic and sales,’ said NFIB
Chief Economist Bill Dunkelberg. ‘However, some small businesses are still
struggling financially to operate at full capacity while navigating state and
local regulations and are uncertain about what will happen in the future.’”
Press release at...
https://www.nfib.com/surveys/small-business-economic-trends/
CPI (Advisor Perspectives)
“The Bureau of Labor Statistics released the September
Consumer Price Index data this morning. The year-over-year non-seasonally
adjusted Headline CPI came in at 1.37%, up from 1.31% the previous month. Year-over-year
Core CPI (ex Food and Energy) came in at 1.71%, down from 1.74% the previous
month and below the Fed's 2% PCE target.” Story at...
EVERYONE’S BACK IN THE POOL (Real Investment Advice)
“The market remains in a bullish trend from the March
lows but has returned to more extreme overbought conditions on an
intermediate-term basis. Despite valuations on a 2-year forward basis at more
extreme levels, economic growth recessionary, and a significant risk of a
failure to pass more stimulus, investors continue to chase markets... While
this does not mean the market is about to crash, it does suggest ‘everyone’ is
once again on the long side of the ‘risk trade.’ The piling back into
stocks following the brief September decline has sent our technical composite
gauge back towards extreme overbought levels as well.” Commentary at...
https://realinvestmentadvice.com/technically-speaking-cot-everyones-back-in-the-pool-q3-2020/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website at
6:20pm Tuesday. 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.
AN OUTBREAK OF HISTORIC PROPORTIONS (MarketWatch)
“I think we’re facing a whole lot of trouble,” Fauci
said. “We have a baseline of infections now that vary between 40,000 and 50,000
per day. That’s a bad place to be when you’re going into the cooler weather of
the fall, and the colder weather of the winter... Fauci has said that he’s
hopeful that a coronavirus vaccine could be developed by early 2021, but has
repeatedly said it’s unlikely that a vaccine will deliver 100% immunity; he
said the best realistic outcome, based on other vaccines, would be 70% to 75%
effective.” Story at...
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 0.6% to 3512.
-VIX rose about 4% to 26.07.
-The yield on the 10-year Treasury slipped to 0.731%.
The S&P 500 is 12.6% above its 200-dMA. (Sell point
is 12%.) When Sentiment is considered, the signal is also bearish.
Bollinger Bands were neutral today, but Bollinger Bands
and RSI were both close to overbought.
Overall, we are getting closer to a top.
The daily sum of 20 Indicators slipped from +10 to +6 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from +47 to +59. (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 13 days after a SELL before that. The Volume indicator is positive;
Sentiment and Price Indicators are neutral. VIX is bearish.
I remain bearish in the longer term, but this rally may
have farther to go – not much farther.
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
TUESDAY 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.
