“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 (NBC News)
“Around 745,000 people filed for unemployment benefits
for the first time last week, underscoring how the labor market continues to be
hammered by the pandemic and by restrictive measures to control spread of the
coronavirus. Economists had predicted the latest weekly initial jobless claims
for the week ended Feb. 26 would total around 750,000.” Story at...
PRODUCTIVITY (clickorlando.com)
“U.S. productivity fell at an annual rate of 4.2% in the
fourth quarter, the largest quarterly decline in nearly four decades.” Story
at...
FACTORY ORDERS (Reuters)
“The Commerce Department said on Thursday that factory
orders shot up 2.6% after rising 1.6% in December. Economists polled by Reuters
had forecast factory orders advancing 2.1% in January.” Story at...
DIAGNOSIS INFLATION (The Felder Report)
“The recent breakout in the copper price suggests core
inflation is likely too low at present and will soon begin to trend higher over
the next couple of years. Because asset prices of all sorts have seemingly
discounted a ‘lower for longer’ environment in both inflation and interest
rates, this signal may be more meaningful than it might otherwise be.”
Commentary at...
https://thefelderreport.com/2021/03/03/dr-copper-delivers-a-diagnosis-of-inflation/
STOCKS TUMBLE AS POWELL SIGNALS INFLATION IS AHEAD
(CNN.com)
“Powell, speaking at a conference Thursday, predicted strong job growth and increases in consumer prices as the
vaccine rollout allows the economy to reopen fully. But he cautioned the Fed
does not think the economy is at risk of overheating. Story at....
https://www.cnn.com/2021/03/04/economy/jerome-powell-inflation-jobs-market/index.html
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:30pm 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 1.3% to 3768.
-VIX rose about 7% to 28.57.
-The yield on the 10-year
Treasury rose to 1.564%.
I took a large short position
today, using SDS. This effectively
reduced my % of stocks invested from 60% to a more conservative 50%.
I had previously increased my %-invested in
stocks when there were solid indications that the pullback was over. That has
not worked out. When we see a buy-signal (on lower volume and improving market
internals) that fails, markets usually don’t fall too much farther. Unfortunately,
that is not always true, so we are not out of the woods yet.
Still, the S&P 500 gave a
few more signs today that the pullback may not have much more to go. As of Thursday,
Bollinger Bands are oversold and RSI (14-dSMA) is getting very close to
oversold. (It was 34 Thursday; 30 is oversold in my system.) Volume was very
high today and nearly reached the levels seen at the bottom of the coronavirus
correction. It may take another big drop in price, but my guess is that we
haven’t got too much farther to go. A test of the prior 29 Jan-low of 3714 is
always possible.
We can remember my comment from last week: There’s an old
saying on Wall Street: “Never on a Friday.” Once the markets get into one of
these weekly down-moves, they rarely bottom on a Friday. They typically give
participants over the weekend to brood about their losses and then they show up
the next Monday in “sell mode.” This leads
to Turning-Tuesday. If the bromide is true this time (it wasn’t last week), we
would expect the markets to bottom Monday and bounce Tuesday.
The daily sum of 20 Indicators
remained -2 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -48 to -45
(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 another
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 Long Term NTSM indicator
ensemble remained HOLD. Sentiment & VIX are neutral; Volume is bearish;
Price is bullish.
I think we’ll see a bottom in the next several days. I
won’t get too wound-up unless I start getting more sell signals.
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.
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.
