Wednesday, March 17, 2021

FOMC Rate Decision ... Housing Starts ... Housing Permits ... EIA Crude Inventories … Coronavirus (Covid-19) … Stock Market Analysis … ETF Trading … Dow 30 Ranking

“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

 

“In my decades of investing experience, I have not seen such mindless and uninformed speculation as I have witnessed recently. Indeed, in nominal dollar terms...it is far in excess of the dot.com boom.” – Doug Cass.

 

FOMC RATE DECISION (CNBC)

“The Federal Reserve on Wednesday sharply ramped up its expectations for economic growth but indicated that there are no interest rate hikes likely through 2023 despite an improving outlook and a turn this year to higher inflation.” Story at...

https://www.cnbc.com/2021/03/17/fed-decision-march-2021-fed-sees-stronger-economy-higher-inflation-but-no-rate-hikes.html

 

HOUSING STARTS / BUILDING PERMITS (CNBC)

“Housing starts decreased 6.0% to a seasonally adjusted annual rate of 1.580 million units last month, the Commerce Department said on Thursday... Permits for future homebuilding shot up 10.4% to a rate of 1.881 million units in January.” Story at...

https://www.cnbc.com/2021/02/18/us-housing-starts-fell-more-than-expected-in-january-amid-soaring-lumber-prices.html

 

EIA CRUDE INVENTORIES (EIA)

“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.4 million barrels from the previous week. At 500.8 million barrels, U.S. crude oil inventories are about 6% 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 6:30pm 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 rose about 0.3% to 3974.

-VIX fell about 3% to 19.23.

-The yield on the 10-year Treasury rose to 1.645%.

 

We can see the impact of the FED in the chart below. The FED announcement was 2PM and the Index shot-up from there.






















The daily sum of 20 Indicators slipped from +8 to +4 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +45 to +51 (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 BUY. Price, Volume & VIX are bullish; Sentiment, is neutral.

 

There are not many negative signs around. The S&P 500 remains relatively stretched above its 200-dMA. I think that will remain stretched and I am not concerned at this point. Investors are focusing on the unprecedented fiscal stimulus and the extreme FED-support keeping interest rates down. 

 

I remain bullish.

 

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.  

 

As of 9 March, my 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 most retirees.

 

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, and I can call a bottom, 80% would not be out of the question.

 

The markets have not retested the lows on recent corrections and that left me under-invested on the bounces. I will need to put less reliance on retests in the future.