“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
JOBLESS CLAIMS (CNBC)
“Jobless claims fell sharply last week despite severe
winter storms that swept across Texas and other parts of the South, the Labor
Department reported Thursday. First-time filings for unemployment insurance
totaled 730,000 for the week ended Feb. 20...” Story at...
https://www.cnbc.com/2021/02/25/weekly-jobless-claims.html
DURABLE ORDERS (ABC News)
“Orders to U.S. factories for big-ticket goods shot up
3.4% in January, pulled up by surge in orders for civilian aircraft.” Story
at...
https://abcnews.go.com/US/wireStory/orders-us-durable-goods-climb-34-january-76107567
GDP – 2ND ESTIMATE (US News)
“THE NATION'S GROSS domestic
product increased 4.1% in the fourth quarter, the Bureau of Economic Analysis
reported Thursday.” Story at...
“Gross Domestic Product (GDP). GDP is
simply the total amount of spending in an economy. GDP, as currently measured,
does not distinguish between “good” spending and “bad” spending. GDP does not
distinguish between consumption spending and investment spending. GDP also does
not distinguish whether spending is generated by existing wealth, by going into
debt temporarily, or by going into debt permanently. In this world, every dollar
spent on education or new means of production, is counted the same as every
dollar spent on epic bachelor parties and video games.” – Michael Lebowitz,
Real Investment Advice
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:00pm 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 fell
about 2.5% to 3829.
-VIX jumped about 35% to 28.89.
-The yield on the 10-year
Treasury rose to 1.525%.
Yesterday, it appeared that FED Chair Powell said the
right things, because the markets reacted with some very positive action. Needless
to say, that thought was premature to say the least.
I linked a story, Wednesday,
that suggested inflation worries were the cause of the current market
worries. If that were true, we’d expect
to see gold (GLD) rising. Today, GLD was
down almost 2%, so it doesn’t seem like inflation is the problem. Business-news
reports that bond-yields are the cause of the current market weakness. That may
be - yields are rising rapidly.
Today was another Distribution
day and the 5-week total remains 6-distribution days so we still have a bearish
“distribution” signal.
The S&P 500 is 11.2% above
its 200-dMA (Sell point is 12%.); this is below my bearish limit. However, when
Sentiment is considered, the signal remains bearish.
Today was a statistically
significant down-day. That just means that the price-volume move exceeded my
statistical parameters. Data shows that a statistically-significant, down-day
is followed by an up-day about 60% of the time.
The positive signs I mentioned
yesterday are still there. Cyclical Industrials (XLI-ETF) are turning up and
are improving vs. the S&P 500; Utilities (XLU-ETF) are underperforming the
Index. New-highs are still reasonably high, but the Fosback New-High/New-Logic
Indicator is now neutral. Other indicators declined.
The daily sum of 20 Indicators declined from zero to -7
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations dipped from -19 to -27 (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 declined to SELL. Sentiment & Price are neutral; Volume
& VIX are negative.
The S&P 500 closed 0.6% above its 50-dMA, now 3805. I would
wait until that level is broken decisively before making significant portfolio changes.
I am not convinced that this downturn is going to turn into a major sell-off.
It could, but we don’t really know. 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. That suggests that the correction will be less
than 10%. If the Index falls much below the 50-dMA, it will be time to
reconsider.
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 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.
