“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. – Meade Stith
EMPIRE STATE MANUFACTURING (Times Union)
“Business activity grew "modestly" across New
York state in February, according to the latest findings of the Empire State Manufacturing Survey. The monthly survey is
conducted by the Federal Reserve Bank of New York. The index of general business
conditions index, at 12.1, reached its highest point since last July, the
survey found.” Story at...
MORGAN STANLEY WARNS FLOOD OF RETAIL INVESTORS BUYING THE
VIX COULD TRIGGER HUGE SHORT SQUEEZE (ZeroHedge)
... the bank, like everyone else stunned by the recent
bursts of short squeezes bull ramps emanating from the WSB subreddit, analyzed
where a squeeze blitz could strike next and concluded that the VIX complex
itself (primarily via retail-friendly long VIX ETFs and calls on said ETFs)
could become a target due to its not insubstantial short interest.” Story at...
WHY STIMULUS DOESN’T LEAD TO ORGANIC GROWTH (Real
Investment Advice)
“Suppose Congress passes something close to Biden’s
Administration stimulus proposal of $1.9 trillion. In that case, that will lift
the cumulative amount of fiscal stimulus in the past 12 months to $5
trillion—three tranches $2.2 trillion, $900 billion, and $1.9 trillion. In the
past year, nominal GDP totaled $21 trillion, so the cumulative injection
of fiscal stimulus amounts to almost 25%. Nothing in modern times comes close,
especially during peace times...
...Given the scale of fiscal stimulus, one would expect
the Fed to be thinking of “leaning against the wind.” But not this Fed–the
Fed is using the same playbook from the Great Financial Recession, providing
unneeded stimulus to the red-hot housing market. What’s the economic and
financial endgame? It’s hard to see anything but a ‘boom-bust’ scenario
playing out with fast growth and rising market interest rates in 2021 and early
2022, followed by a bust in late 2022/23 when the fiscal stimulus/support dries
up.” - Joseph Carson, former Chief Economist at Alliance
Bernstein. From a commentary by Lance Roberts, Chief Portfolio Strategist/Economist
for RIA Advisors.
Commentary and charts at...
https://realinvestmentadvice.com/macroview-why-stimulus-doesnt-lead-to-organic-growth/
WHAT DO WE DO WHEN THE WIND TURBINES FREEZE? (MishTalk)
“The wholesale price of electricity spikes 10,000% in a
Texas power outage. Among other problems, the wind turbines are all frozen... Wind’s share has tripled to
about 25% since 2010 and accounted for 42% of power last week before the freeze
set in. About half of Texans rely on electric pumps for heating
[heat pumps], which liberals want to mandate everywhere. But the pumps use a
lot of power in frigid weather. So while wind turbines were freezing, demand for power was
surging...Wind is not a reliable source, as we have just proven in
spades...Yet, despite the facts that US carbon output is shrinking and the US
only accounted for 14.5% of the total global footprint, the absurd push to
eliminate all US carbon presses on.” – Mish Shedlock. Commentary at...
My cmt: Germany has had similar problems with frozen wind
turbines and solar panels covered in snow. The difference is that Germany had
capability in older plants (gas, oil, coal) to take up the slack.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:30pm 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
-Monday the S&P 500 dipped
about 0.1% to 3933.
-VIX rose about 7% to 21.46.
-The yield on the 10-year
Treasury rose to 1.316%. (Today, the Pros on CNBC were suggesting that a value
above 2% could be a problem for the stock market.)
I saw where a Pro said he
wouldn’t chase the Russell 2000 (IWM). I was curious about his statement, so I
calculated the IWM’s % above its 200-dMA. IWM is now 38% above its
200-dMA. Going back to 2004, nothing comes
close to this number, other than the 40% value 3-days ago. Even getting to
double digits was rare. There is no way to time this since my data doesn’t go
back far enough to make any conclusions. Let’s just say, this market has been on
fire.
Now, the market action is
hinting at a weakness. Instead of opening higher and pressing higher as the day
proceeds, recently, we have seen a higher open with weakness later in the day. This
looks concerning for the bulls. I have no guess when a pullback (if any) might
begin, but as others have pointed out, February and March have been bad months
in the last 2 years.
Still, there aren’t many bearish
signs and the indicators are mostly positive.
The daily sum of 20 Indicators declined from +3 to +1 (a positive
number is bullish; negatives are bearish); the 10-day smoothed sum that smooths
the daily fluctuations improved from 0 to +8 (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.
There are a few bear signs
around, but the market has been ignoring these and only one is a top indicator:
-The S&P 500 is 15.4% above its 200-dMA (Sell point
is 12%.); when Sentiment is considered, the signal is also bearish. (This is a Top
Indicator, but the market has been ignoring this value for quite a while.)
-Overbought/Oversold Index (Advance/Decline Ratio). This
one is not a great indicator. It is older and not as popular as it once was.
-Cyclical Industrials
(XLI-ETF) are underperforming the S&P 500.
The Long Term NTSM indicator ensemble
remained HOLD. Volume is Bullish; 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 average in to get to 50%, fully invested.
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
MONDAY 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.
