“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 (CNN.com)
“Another 712,000 Americans filed for unemployment
benefits last week on a seasonally adjusted basis, according to the Labor Department, as the
job market recovery continues to slow... Continued jobless claims stood at 5.5
million, down from 6.1 million in the week before.” Story at...
https://www.cnn.com/2020/12/03/economy/unemployment-benefits-coronavirus/index.html
ISM MANUFACTURING (ISM via prnewswire)
"The November Manufacturing
PMI® registered 57.5 percent, down 1.8 percentage points from the October
reading of 59.3 percent. This figure indicates expansion in the overall economy
for the seventh month in a row after a contraction in April, which ended a
period of 131 consecutive months of growth... "Manufacturing performed
well for the sixth straight month, with demand, consumption and inputs
registering growth, but at slower rates compared to October. Labor market
difficulties, both current and anticipated, at panelists' companies and their
suppliers will continue to dampen the manufacturing economy until the
coronavirus (COVID-19) crisis ends," says Fiore [imothy
R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing
Business Survey Committee].” Press release at...
TRUMP’S FRAUD CLAIMS HIT A BARR – EXCERPT (WSJ)
“Bill Barr can take the heat, and on Tuesday the stalwart
Attorney General guaranteed he’ll get it when he said ‘to date, we have not
seen fraud on a scale that could have effected a different outcome in the
election.’
Mr. Barr told the Associated Press that allegations of
“particularized” fraud, with some that ‘potentially cover a few thousand votes,’
are being explored. But President Trump is down by 150,000 votes in Michigan,
80,000 in Pennsylvania, and 20,000 in Wisconsin. As for the idea that voting
machines were compromised, Mr. Barr said the feds “have looked into that, and
so far, we haven’t seen anything to substantiate that.’
...Fighting such claims is like whack-a-mole. No,
Pennsylvania didn’t count more mail votes than it sent out. No, Wisconsin
didn’t have 89% turnout. No, several states didn’t simultaneously quit counting
ballots on election night. No, ballots in Arizona filled out with Sharpie
markers weren’t discounted. In an election with 155 million votes, there are no
doubt irregularities and maybe some fraud. But for Mr. Trump to win the
Electoral College, he’d need to flip tens of thousands of votes in multiple
states.” – WSJ, Full Editorial at...
https://www.wsj.com/articles/trumps-fraud-claims-hit-a-barr-11606866056
My cmt: This piece is an intelligent read and it debunks the
claims by the Trump team, not just the ones I excerpted. The Wall Street
Journal leans right, so this is a legitimate criticism. It just reinforces comments by Gov Christie,
Republican, that we highlighted earlier and I am repeating below.
CHRISTIE (former NJ GOV) CALLS TRUMP TEAM NATIONAL
EMBARASSMENT (CNBC)
“Listen, I’ve been a supporter of the president, I voted
for him twice but elections have consequences and we cannot continue to act as
if something happened here that didn’t happen,” Christie explained...“They
allege fraud outside of the courtroom but when they go inside the courtroom
they don’t plead fraud and they don’t argue fraud,” Christie said, adding “you
have an obligation to present the evidence, the evidence has not been
presented.” Story at...
My cmt: Those who continue to support this sham are
hurting the country and enflaming those who refuse to consider the facts.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:30 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 slipped
about 0.1% to 3667.
-VIX rose about 0.5% to 21.28.
-The yield on the 10-year
Treasury slipped to 0.910%.
Nasty close today – the S&P
500 lost more than half a percent in the last half-hour of trading to finish in
the red for the day. We still have an over-extended market.
The S&P 500 was 15.9% above
its 200-dMA.
The only time in the last 11
years that the S&P 500 has been 15.9% or higher above its 200-dMA was after
the 2009 bottom of the Financial Crisis in Sept 2009. Then, the S&P 500 was
around 1053, about 56% above the 2009 low. (The S&P 500 is now about 60%
above the COVID-low.) The Index managed to gain about 8% in the next 4 months
and then gave back those gains in a correction that dropped the Index back to
1057. The Index climbed to its prior high and suffered a 16% correction Apr
2010 – Jul 2010 and the Index bottomed at 1023. My point is that the Index is
not likely to make further big gains from its current level as long as the
Index remains stretched.
Today, we had very high, unchanged-volume. In theory this in an indication that investors are confused and it can signal a reversal, in this case down. I don’t know – sometimes it does; more often than not…not.
The daily sum of 20 Indicators
increased from +2 to +8 (a positive number is bullish; negatives are bearish).
The 10-day smoothed sum that smooths the daily fluctuations dropped from +61 to
+58. (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 back up to BUY, 24 Nov. Now, Price, Volume & VIX are
bullish; Sentiment is neutral. The Indicator remains BUY, but I think we are
near a top so I am waiting.
I continue to see very bullish
indicators; but recently there are signs of a weakening market. For the most
part, that trend continues.
The market remains extremely
overbought with the S&P 500 15.9% above its 200-dMA. If past history follows,
that tends to cap the gains going forward.
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
THURSDAY MARKET INTERNALS
(NYSE DATA)
Market Internals improved to POSITIVE 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.
