“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.
EMPIRE STATE MANUFACTURING (Advisor Perspectives)
“This morning we got the latest Empire State Manufacturing
Survey. The diffusion index for General Business Conditions at 4.9
was a decrease of 1.4 from the previous month's 6.3. The Investing.com forecast
was for a reading of 6.9.” Commentary and analysis at...
INDUSTRIAL PRODUCTION / CAPACITY UTILIZATION (mdm)
“According to the Industrial Production and Capacity
Utilization Report, manufacturing output increased 0.8% during the month;
year-to-date industrial production has improved but is still 5% below its
pre-pandemic level... Capacity utilization for the industrial sector increased
0.3% in November to 73.3%, a rate that is 6.5% below its long-run (1972–2019)
average but 9.1% above its low in April.”
Story at...
https://www.mdm.com/news/research/industrial-production-up-0-4-in-november/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 10:30pm Monday, however I averaged numbers for Sunday and Monday. 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
-Tuesday the S&P 500 rose
about 1.3% to 3695.
-VIX dropped about 7% to 22.89.
-The yield on the 10-year
Treasury rose to 0.913%.
We had another big day today, this time up. This suggests
the S&P 500 will decline Wednesday.
If the S&P 500 continues its back-and-forth action with large moves;
it would also indicate a topping pattern.
MACD of Breadth did turn down today, but the McClellan Oscillator
bounced back to the bullish side.
New-highs dipped today while new-lows were up a bit. This
trend will need to continue if we are to confirm a correction underway. So far,
no smoking gun.
The daily sum of 20 Indicators declined from +2 to +0 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations declined from +52 to 46. (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, 15 Dec. Now, Price & VIX are bullish; Sentiment
& Volume are neutral. Since it appears we are near a top, I will wait.
Even while the market
indicators are not bearish, the market remains extremely overbought with the
S&P 500 16.2% above its 200-dMA. If past history follows, that tends to cap
the gains going forward. The downside risk is greater than the upside risk.
I’ll continue to keep a low %
of funds in the stock market until I see a better buying point.
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 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 markets have not
retested the lows on recent corrections and that has left me under-invested on
the bounces. I will need to put less reliance on retests in the future.
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 a correction is deep
enough, 80% would not be out of the question.
