“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
“This country was founded by the bayonet;
it survives by the ballot. Those who
falsely disparage the honesty of our elections are striking a blow at the
foundations of our nation and should be charged with sedition.” – Meade Stith
CONSUMER CONFIDENCE (Conference Board)
“The Conference Board Consumer Confidence Index® improved
again in February, after increasing in January. The Index now stands at 91.3
(1985=100), up from 88.9 in January. The Present Situation Index—based on consumers’
assessment of current business and labor market conditions—climbed from 85.5 to
92.0. However, the Expectations Index—based on consumers’ short-term outlook
for income, business, and labor market conditions—fell marginally, from 91.2
last month to 90.8 in February...
...’After three months of consecutive declines in the
Present Situation Index, consumers’ assessment of current conditions improved
in February,” said Lynn Franco, Senior Director of Economic Indicators at The
Conference Board. “This course reversal suggests economic growth has not slowed
further. While the Expectations Index fell marginally in February, consumers
remain cautiously optimistic, on the whole, about the outlook for the coming
months. Notably, vacation intentions—particularly, plans to travel outside the
U.S. and via air—saw an uptick this month, and are poised to improve further as
vaccination efforts expand.’”
https://www.conference-board.org/data/consumerconfidence.cfm
DETACHED PARABOLAS (Hussman Funds)
“Nothing so animates a speculative herd as a parabolic
price advance in an asset detached from any standard of value. I am convinced
that future generations will use the present moment to define the concept
of a reckless speculative extreme, in the same way our generation uses “1929”
and “2000”...On Wall Street, urgent stupidity has one terminal symptom, and it
is the belief that money is free. Investors have turned the market into a
carnival, where everybody “knows” that the new rides are the good rides, and
the old rides just don’t work...Even at those pre-crash extremes, the S&P
never sold above 20 times record earnings. The market clearly faces problems at
a multiple of 32...” – John P. Hussman, Ph.D., March 7, 2000...
...The current situation would not be as dangerous if the
stocks in the highest valuation deciles accounted for a small percentage of
S&P 500 market capitalization. Unfortunately, that is not the case.
The largest S&P 500 components by market capitalization have eclipsed
the price/revenue multiples observed among the largest stocks at the 2000
pre-collapse peak, while the smallest S&P 500 components have eclipsed the
price/revenue multiples observed at the 2007 pre-collapse peak. As my
friend Jesse Felder puts
it, this is an “everything” bubble.” John Hussman, Phd. Commentary at...
https://www.hussmanfunds.com/comment/mc210201/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:00pm 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.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose
about 0.1% to 3877.
-VIX slipped about 1% to 23.11.
-The yield on the 10-year
Treasury dipped to 1.349%.
“Distribution” in the stock
market refers to the increased selling of stock by large institutions. It is
indicated by down days greater than 0.2% that occur on more volume than the previous
day. It is thought that four to six days of distribution over a period of four
or five weeks, are often enough to turn a previously advancing market into
decline. For my purposes, I look for more than 5 distribution-days over a
5-week period to give a bearish signal. The signal is cancelled by a
statistically-significant, up-day, on higher volume than the previous day.
Yesterday (Monday) and Friday
were both Distribution-days and the 5-week value was 6 distribution-days so we got
the bearish signal yesterday. I am not a big fan of this indicator, but it does
suggest that we are in a down-trend until we see other signs of a trend change.
The daily sum of 20 Indicators remained -6 (a positive
number is bullish; negatives are bearish); the 10-day smoothed sum that smooths
the daily fluctuations dipped from -5 to -17 (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 remained HOLD. Volume, VIX, Sentiment & Price are neutral.
It seems that we are in a bit of a pullback. We’ll see what happens at the 50-dMA. The last time we were there, 29 Jan, the
S&P 500 bounced strongly upward. We may get lower this time, but I doubt
that it will get too much smaller. The breadth
was pretty good at the last all-time high on the Index, and that suggests a
pullback of less than 10%. The 50-dMA is now 3793, about 2.2% lower than
today’s close.
I am still conservatively positioned, but I did add the
XLE-ETF 10 Feb. I won’t rush to add more
stocks, but I may bump stock holdings up to get to 50%, fully invested, if I can identify a buy signal.
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 dropped to BEARISH 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 40% invested in stocks. You may wish to have a higher or lower % invested
in stocks depending on your risk tolerance. 40% is a 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.
