“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
FED BEIGE BOOK (Bloomberg)
“The U.S. economy expanded modestly in the first two
months of the year and sentiment among business owners is picking up as
vaccinations bolstered the prospects for economic growth, the Federal Reserve
said... ‘Most businesses remain optimistic regarding the next six to 12 months
as Covid-19 vaccines become more widely distributed...’” Story at...
ADP EMPLOYMENT CHANGE (FOX Business)
“The report showed that companies added 117,000 jobs last
month, missing the 177,000-job increase that economists surveyed by
Refinitiv had predicted. “The labor market continues to post a sluggish
recovery across the board,” Nela Richardson, chief economist at ADP, said in a
statement. “We’re seeing large-sized companies increasingly feeling the effects
of COVID-19, while job growth in the goods-producing sector pauses.” Story
at...
https://www.foxbusiness.com/economy/adp-february-employment-report-2021
ISM NON-MANUFACTURING INDEX (ISM via prnewswire.com)
"The February Manufacturing
PMI® registered 60.8 percent, an increase of 2.1 percentage points from
the January reading of 58.7 percent. This figure indicates expansion in the
overall economy for the ninth month in a row after contraction in March, April,
and May...The manufacturing economy continued its recovery in February. Survey
Committee members reported that their companies and suppliers continue to
operate in reconfigured factories. Issues with absenteeism, short-term
shutdowns to sanitize facilities, and difficulties in hiring workers remain challenges
and continue to cause strains that limit manufacturing-growth potential.” Press
release at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 21.6 million barrels from the
previous week. At 484.6 million barrels, U.S. crude oil inventories are about
3% above the five-year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 7:45pm Wednesday. 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
-Wednesday the S&P 500
fell about 1.3% to 3820.
-VIX rose about 11% to 26.67.
-The yield on the 10-year
Treasury rose to 1.485%.
The S&P 500 tested the
50-dMA again today. The close was not pretty since the Index dropped all afternoon
and closed at the low for the day. That’s always a worry. Only 47% of the
stocks on the NYSE were up today.
Still, there were some good
signs: Bollinger Bands are very close to giving an “oversold” indication;
Up-volume outpaced down-volume; there were a lot of new-52-week highs; the
40-dMA of new-highs is headed up (a good trend indicator); both the XLU and the
XLI, when compared to the S&P 500, are indicating that investors are not
worried; The daily sum of 20 Indicators improved from -3 to -2 (a positive
number is bullish; negatives are bearish); the 10-day smoothed sum that smooths
the daily fluctuations dipped from -47 to -48 (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.
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. Since the statistically-significant, down-day
occurred at the 50-dMA, this is likely to be the end to this pullback. Of
course, I said that before, didn’t I.
It really comes down to the 50-dMA. Will it hold? We could drop below it, but I expect
that the markets will move up from here.
If I’m wrong, and I certainly could be (futures are down as I write
this), I don’t think we’ll get too much below the 50-day although a test of the
prior 29 Jan-low of 3714 is always possible.
The Long Term NTSM indicator ensemble
remained HOLD. Sentiment & VIX are neutral; Volume is bearish; Price
is bullish.
I am bullish, but concerned.
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
WEDNESDAY 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 60% invested in stocks. You may wish to have a higher or lower % invested
in stocks depending on your risk tolerance. 50% is a conservative position that
I consider fully invested for a retiree, so I am a little extended at this
point.
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.
