"I had trouble posting tonight due to more Blogger changes or malfunctions(?) I wrote this around 7pm. Now that the futures are down, it looks like a correction is underway.
"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.
JOBLESS CLAIMS (CNBC)
The pace of workers filing for unemployment claims picked
up last week and was a bit higher than Wall Street had been expecting. Jobless
claims totaled 742,000 for the week...” Story at...
https://www.cnbc.com/2020/11/19/weekly-jobless-claims.html
LEADING ECONOMIC INDICATORS (Conference Board via
prnewswire)
“The Conference Board Leading Economic
Index® (LEI) for the U.S. increased 0.7 percent in October to
108.2 (2016 = 100), following a 0.7 percent increase in September and a 1.6
percent increase in August.
"The US LEI rose again in October, with widespread
improvements despite weakness from housing permits and consumers' outlook on
economic conditions. However, the leading index has been decelerating in recent
months, which suggests growth will moderate significantly in the final months
of 2020, slowing down from the unusually rapid pace in Q3," said Ataman
Ozyildirim, Senior Director of Economic Research at The Conference Board.” Press release at...
PHILADELPHIA FED INDEX (Advisor Perspectives)
“The latest Manufacturing Index came in at 26.3, down 6
from last month's 32.3. The 3-month moving average came in at 24.5, up from
21.5 last month. Since this is a diffusion index, negative readings indicate
contraction, positive ones indicate expansion.” Story at...
EXISTING HOME SALES (CNN)
“Even amid a global pandemic and high unemployment,
people are still buying homes at the fastest rate in years. Home sales rose again in October, at their highest pace in 14
years, according to the National Association of Realtors.” Story at...
https://www.cnn.com/2020/11/19/success/existing-home-sales-october/index.html
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 6:40 pm Thursday. 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
-Thursday the S&P 500 rose
about 0.4% to 3582.
-VIX slipped about 3% to 23.11.
-The yield on the 10-year
Treasury dropped to 0.835%.
What I’d like to see is a test
of the prior lows; either, March, September or even October. Then, we might be
in position to increase stock holdings significantly. So far, I have been left
without solid answers and the bounces have not been encouraging. The market new
highs in September and November have been made with a very narrow advance while the S&P 500 has been stretched too high above its 200-dMA. It’s hard to be
bullish with those negatives in place. Now, we see that the indicators are
slipping.
Three topping indicators are
warning of a top:
RSI turned bearish again; The
Index is still to far ahead of its 200-dMA; the S&P 500 is too far ahead of
the % of stocks advancing on the NYSE.
The daily sum of 20 Indicators
declined from +11 to +6 (a positive number is bullish; negatives are bearish).
The 10-day smoothed sum that smooths the daily fluctuations slipped from +118
to +114. (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 switched to BUY, 9 Nov. Now, Price, VIX and Volume are bullish;
Sentiment indicator is neutral. The ensemble remains BUY, but that just
means that the market has been strong. It looks like we’re at a top, so I am
not buying yet.
The extreme overbought market
pretty much guarantees that we’ll have a pullback and it appears that it may
have already started.
I’ll continue to sit out.
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
THURSDAY MARKET INTERNALS
(NYSE DATA)
Market Internals slipped to 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.
