“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
WEEKLY INVESTMENT STRATEGY-EXCERPT (Raymond James)
“Pullbacks remain a buying opportunity as we reiterate
our year-end S&P 500 target of 4,025. From a technical perspective, the
S&P 500 remains above its 200-day moving average (3,493) and is nearing
oversold territory (current Relative Strength Index (RSI) level 39.97 versus 30
threshold)...Investors should not overreact to modestly higher inflation and
interest rates because they are rising for the right reasons as it is a sign
the economy is healing from the depths of the pandemic-induced recession... The
Tech sector, which turned negative on a year-to-date basis this week, has
significantly weighed on the NASDAQ as the index posted its worst two-day
decline since early September yesterday (-4.8%). However, it is far too early
to give up on this sector given its recent above-average earnings results,
strong visibility in earnings (e.g., 5G), and our expectation that Tech will be
a beneficiary of significant continued consumer and business demand as the
economy reopens.” – Larry Adam, CIO, Raymond James. Commentary at...
FACT CHECKING KERRY’S CLIMATE CLAIMS (AP)
“JOHN KERRY, Biden’s climate envoy... “Three years ago,
scientists gave us a stark warning. They said we have 12 years to avoid the
worst consequences of climate change.” — virtual climate adaptation summit,
hosted by the Netherlands on Jan. 25.
THE FACTS: He’s incorrect that 2030 is a drop-dead date
to avert the “worst consequences” of climate change...
The report “did not ever say we had ’12 years left’ in
2018,” said Jim Skea, an IPCC co-chair and one of the report’s lead authors. He
said Kerry and others are wrongly interpreting references to the year 2030 in
the report, which was used as a goal post “for no other reason than it marked
the transition from one decade to the next” and was when government pledges to
cut emissions aimed to act." Story at...
My cmt: As Mich Shedlock has reported, “...the US reduced
its carbon footprint from 6.13 billion tons in 2007 to 5.28 billion tons in
2019.” At the same time the leading polluters, China and India have increased
theirs drastically. This means we don't have a level playing field and China has an eco advantage when it comes to the cost of manufacturing, in addition to their low cost of labor.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 7:00pm 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 0.5% to 3821.
-VIX rose about 3% to 25.47.
-The yield on the 10-year
Treasury slipped to 1.566%.
S&P 500 Correction Data:
-Today was Day-15 of the correction.
From top to bottom the average small correction (<10%) in the last 10-years
has lasted about 33 days.)
-The S&P 500 is down 2.9%
from its all-time high. The average drop from the top for a small correction is
about 8%.
-The Index is 9.9% above its
200-dMA
-The Index is 0.1% below
its 50-dMA
I took a large short position 4
March using SDS. This effectively
reduced my % of stocks invested from 60% to a more conservative 50%. I still
have that in place, but I will cover Tuesday morning if the Index bounces way
up, say greater than 1.5%. Otherwise, I will wait and see what happens in the final
hour of trading. If we see more weakness late in the day, I’ll hold the short.
We have mixed evidence regarding
where this pullback is going:
-On the bear side: (1) more
drop ahead is suggested by the failure of the Index to hold to the 50-dMA,
again. (2) the NASDAQ Index has fallen more than 10%. The S&P 500 has
dipped less than 3%. Usually, the indices are reasonably correlated.
-On the bull side we have
several clues:
(1) 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. Corrections greater than 10% usually happen with a narrow advance
with new-52-week-highs in the range of 3% or less. So we might expect a
correction less than 10% now.
(2) Cyclical Industrials (XLI-ETF) are outperforming the
S&P 500.
(3) The S&P 500 is outperforming Utilities ETF (XLU).
(4) New-52-week-Highs turned up today, on a 10-dayMA
basis and there was a 3.5 standard-deviation shift in new-highs. It sure seems
like the S&P 500 doesn’t want to follow the NASDQQ down...odd.
I lean toward the bull side. I think the pullback will be limited for the
S&P 500.
Back on 14 August 2020 I noted: “Apple has a PE of 34;
that’s higher than it’s been in the last 3 years and it only has a Dividend of
0.75%. I am not currently a fan of Apple stock.” It is now down more than 6% since
then and fell 4%+ today. Apple’s PE is still a high (for Apple) of 32. The
current NSTM momentum leader is Goldman Sachs. GS has a PE of 14. While the growth rates are
different, Apple is still considered “overvalued” by many Pros. GS is considered "undervalued". This micro-look at is an example of why the Tech
stocks are in correction.
The daily sum of 20 Indicators
improved from -1 to +3 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations improved from -39
to -30 (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. Sentiment & VIX are neutral; Volume is bearish;
Price is 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
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.
As of 4 March, my stock-allocation
is about 50% 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.
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.
