“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
"The extent to which the president, President Trump,
for months leading up to January 6 spread the notion that the election had been
stolen or that the election was rigged was a lie and people need to understand
that. We need to make sure that we as Republicans are the party of truth that
we are being honest about what really did happen in 2020..." - Liz Cheney, US Republican
Representative, Wyoming.
“January 6 is going to leave a scar. For 220 years one of
the most beautiful things about America has been a peaceful transfer of power.
But what we saw three weeks ago was ugly, shameful mob violence to disrupt a
Constitutionally-mandated meeting of Congress to affirm that peaceful transfer
of power...It happened because the president lied to you. He lied about the
election results for 60 days. Despite losing 60 straight court challenges, many
of them handed down by Trump-appointed judges...He lied by saying the vice
president could violate his constitutional oath and declare a new winner. That
wasn't true.” - Ben Sasse, US Republican Senator, Nebraska.
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. – W. Meade Stith III
IHS MARKIT FLASH COMPOSITE PMI (Markit)
“Businesses in the U.S. reported the strongest monthly
expansion in output for almost six years in February, spurred by accelerating
service sector activity and sustained robust growth of manufacturing output.
Adjusted for seasonal factors, the IHS Markit Flash U.S. Composite PMI Output
Index posted 58.8 in February, up slightly from 58.7 in January. The upturn was
the sharpest since March 2015.” Press release at...
https://www.markiteconomics.com/Public/Home/PressRelease/3047d652f486442181de65d5a64306c5
EXISTING HOME SALES (CNBC)
“After a brief pullback in December, homebuyers returned
to the market, although they are still being hampered by record low supply. Closed
sales of existing homes in January increased 0.6% compared with December,
according to the National Association of Realtors.” Story at...
Sales were 23.7% higher than in January 2020.
TRUMP LOST TO HIMSELF (WSJ)
“Mr. Trump was favored 6 to 1 or more among voters on the
economy. But the coronavirus was the top voter issue in both groups of [swing] states,
and Mr. Biden carried those voters 3 to 1. Mr. Trump’s eroded credibility and
inability to maintain a consistent Covid message may have been decisive. More
startling is that Mr. Trump “suffered his greatest erosion with white voters,
particularly white men in both [swing] state groups...”
...The point is to remember, as time passes and Mr. Trump
blames everyone else for his defeat, that 2020 was a winnable race. Mr. Trump
had many accomplishments to tout, and voters recognized them. But Mr. Biden’s
consistent campaign message of a return to a calmer, more unifying politics
resonated with millions of voters who had tired of the constant Trump turmoil. Mr.
Trump didn’t lose to Joe Biden. He lost to himself.” Commentary at...
https://www.wsj.com/articles/trump-lost-to-himself-11613691782
My cmt: I thought he lost when, right before the election,
he said he would fire Dr. Fauci.
COVID FROM LAB ACCIDENT? (ZeroHedge)
It could be, but the following story is probably fake...
“Professor Dr. Roland Wiesendanger, a leading German expert in
the field of nanotechnology and three-time winner of the prestigious European
Research Council Advanced Grant, has completed a one-year, hundred-page study on
the origin of the novel coronavirus. Professor Wiesendanger concludes that “both the number and
quality of the circumstantial evidence point to a laboratory accident at the
virological institute in the city of Wuhan as the cause of the current pandemic.”
Story at...
My cmt: The source for this article is highly
questionable.
Here’s what Wikipedia had to say about “Swiss Policy
Research” that authored this report on ZeroHedge:
“The site has been criticized for spreading conspiracy
theories, especially relating to the COVID-19 pandemic...it
is clearly political, and its content is pseudoscientific ("pseudowissenschaftlich"). The
site has also been categorized as a propaganda tool. In
2021, Swiss Policy Research suggested that QAnon was a psyop of the FBI. Due to the persistent
use of the German letter ß,
which is not commonly used in Switzerland, it has been suspected that the
creator is not from Switzerland, contrary to what the website title suggests.”
https://en.wikipedia.org/wiki/Swiss_Policy_Research
I read ZeroHedge, but they frequently post crap and bogus
information, so be careful. It is a propaganda website.
ERIC HICKMAN: 4TH WAVE OF COVID WILL PUSH
RATES TO ZERO – EXERPT (Real Investment Advice)
“The pandemic will cost the world’s public companies in
aggregate at some point...Apt fiscal and monetary injections forestalled a
deeper contraction. Still, it is a delusion to think we will get out of this
for free – especially in a world economy that was overdue for a retraction
anyways. Even without a fourth COVID-19 wave, the negative impact on jobs,
rents, consumer demand, tax revenue, and entire economy segments (hospitality,
entertainment) has yet to be considered seriously. As they become
so, risk-on markets (stocks, commodities, crypto-currencies, houses, and non-G-7
currencies) will drop, and long-term U.S.
Treasury yields will fall dramatically.” – Lance Roberts, Chief Portfolio
Strategist/Economist for RIA Advisors. Commentary at...
https://realinvestmentadvice.com/eric-hickman-4th-wave-of-covid-19-will-push-rates-to-zero/
Here’s a more optimistic story; the next piece, written
by a Professor at Johns Hopkins, says there won’t be a 4th wave.
COVID – WE’LL HAVE HEARD IMMUNITY BY APRIL (WSJ)
“Why is the number of cases plummeting much faster than
experts predicted? In large part because natural immunity from prior infection
is far more common than can be measured by testing...There is reason to think
the country is racing toward an extremely low level of infection. As more
people have been infected, most of whom have mild or no symptoms, there are
fewer Americans left to be infected. At the current trajectory, I expect Covid
will be mostly gone by April, allowing Americans to resume normal life.” - Dr. Marty Makary. Professor
at the Johns Hopkins School of Medicine and Bloomberg School of Public Health. Commentary
at...
https://www.wsj.com/articles/well-have-herd-immunity-by-april-11613669731
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:15pm Friday. 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
-Friday the S&P 500 dropped
about 0.2% to 3907.
-VIX dipped about 4% to 21.60.
-The yield on the 10-year
Treasury rose to 1.342%.
The market action continues to hint at a weakness. The
markets opened higher, but slipped afternoon and close in negative territory.
Indicators are drifting down – not a huge bearish sign – but it bears watching.
As others have pointed out, February and March have been bad months in the last
2 years.
Here’s today’s Friday run-down of some important
indicators. These tend to be both long-term and short-term, so they are
somewhat different than the 20 that I report on daily.
BULL SIGNS
-The 10-dMA of stocks advancing on the NYSE
(Breadth) is above 50%
-The 50-dMA % of stocks advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA of the % of stocks advancing on the
NYSE (Breadth) is above 50%.
-The Fosback High-Low Logic Index is very bullish. (We’ve
seen high new-highs and low new-lows although that s changing.)
-MACD of S&P 500 price made a bullish crossover
today, 5 February. It has been falling since then and is close to a bearish crossover.
For now, let’s call it bullish.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are
above the 20-dEMA.
-McClellan Oscillator is positive.
-The S&P 500 is outperforming Utilities ETF (XLU).
NEUTRAL
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means it is leaning bearish.
-Bollinger Bands are close to overbought, but are not
there yet.
-Breadth on the NYSE compared to the S&P 500 index is
neutral.
-Overbought/Oversold Index (Advance/Decline Ratio).
-My Money Trend indicator is neutral.
-Long-term new-high/new-low data is flat.
-Short-term new-high/new-low data is flat.
-Slope of the 40-dMA of New-highs is flat.
-The Smart Money (late-day action) is mixed. This
indicator is based on the Smart Money Indicator (a variant of the indicator
developed by Don Hayes).
-We’ve seen 4 up-days over the last 10-days. Neutral.
There have been 4-down days in a row and that suggests Monday is likely to be
down.
-There have been 10 up-days over the last 20 days.
Neutral
-The size of up-moves has been larger than the size of
down-moves over the last month, but by less than is required to give a bull
signal.
-Statistically, the S&P 500 gave a panic-signal, 27
January. This usually means more downside to come, but the signal has expired.
-VIX is relatively flat.
-The market has broadened out; 7.6% of all issues traded
on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high
on 12 Feb. (there is no bullish signal for this indicator.)
-6 Jan, the 52-week, New-high/new-low ratio improved by 4.3
standard deviations – very bullish and also rare. Signal has expired.
-58% of the 15-ETFs that I track have been up over the
last 10-days – neutral. This stat is falling sharply so it could be in the Bear
category.
BEAR SIGNS
-RSI turned bearish 2/19. (If Bollinger Bands join this
signal, we might be near a top.)
-MACD of the percentage of stocks advancing on the NYSE
(breadth) made a bearish crossover 21 Jan.
-The smoothed advancing volume on the NYSE is falling.
-Cyclical Industrials (XLI-ETF) are underperforming the
S&P 500.
-The S&P 500 is 14.1% above its 200-dMA (Sell point
is 12%.); when Sentiment is considered, the signal is also bearish.
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 5
bear-signs and 8 bull-signs. Last week, there were 5 bear-signs and 11
bull-signs. There’s not too much change from last week, but indicators are
trending down.
The daily sum of 20 Indicators declined from -5 to -7 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations dipped from +8 to +6 (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.
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 we
can get a pullback and 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
INTEL (INTC) has been on a tear
recently. It is up over 32% over the
last 2 months. While it is not leading in momentum, at this rate it will be. Those
wishing to add to stock allocations may want to take a look. It is currently
paying a dividend of 2.2%. Other chip makers are doing well too. AMAT has outperformed
INTC over the last 1 and 3-month periods., but AMAT’s dividend is only 0.8%.
FRIDAY 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 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.
