“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
“Bubbles tend to topple under their own weight. Everybody
is in. The last short has covered. The last buyer has bought (or bought massive
amounts of weekly calls). The decline starts and the psychology shifts from
greed to complacency to worry to panic. Our working hypothesis, which might be disproven,
is that September 2, 2020 was the top and the bubble has already popped.”
- David Einhorn, Greenlight hedge fund.
FACTORY ORDERS (Reuters)
“New orders for U.S.-made goods increased solidly in
September, but further gains could be limited amid an anticipated slowdown in
consumer spending as government money for businesses and workers impacted by
the COVID-19 pandemic runs out.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 6:10 pm 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.
When the news media reported that new cases had peaked
based on data over the weekend, I was skeptical. Weekend numbers tend to be
lower and so does Monday. Today we were very near a new high for daily new-cases.
It’s worth watching.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1.8% to 3369.
-VIX dipped about 4% to 35.55.
-The yield on the 10-year Treasury was little changed at
0.896%.
The S&P 500 broke well above the 100-dMA (3311), and
now sits about 1% below the 50-dMA. Investors are acting like the 30 Oct level
of 3270 was the all-clear for the correction. Maybe it was, but I don’t see it
in my numbers. Futures are up nearly 1% as I write this; Mr. Market seems to
like the election although both Trump and Biden supporters claim their guy will
help the market. Who knows?
As for the correction end, neither of the closes on 30
Oct and 28 Oct showed any improvement over the prior low of 3237 on 23 Sept, so
I can’t call an end to the correction. Perhaps we’ll see some positive signs
soon that would convince me to get more aggressive in the stock market. Now,
I’m just waiting.
The daily sum of 20 Indicators improved from -2 to +1 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from -60 to -53. (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 correction is now 43 days old and the Index is 5.9%
below its prior high. 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.
Top to bottom, we have seen a 9.6% range so far.
The Long Term NTSM indicator ensemble switched from HOLD
to SELL, 26 Oct. It remains Sell. (Volume, VIX and the Panic Indicator are
bearish.) The previous Sell signal was on 24 September.
I remain bearish, but the positive market action may make
me re-think my position. I’ll wait and see what the indicators do.
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.
