“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.
PERSONAL SPENDING / INCOME / PCE PRICES (CNBC)
“U.S. consumer spending fell by the most in 10 months in
February as a cold snap gripped many parts of the country and the boost from a
second round of stimulus checks to middle- and lower-income households faded,
though the decline is likely temporary. Consumer spending, which accounts for
more than two-thirds of U.S. economic activity, dropped 1.0% last month... Personal
income tumbled 7.1%...The personal consumption expenditures (PCE) price index
excluding the volatile food and energy component gained 0.1%...” Story at...
https://www.cnbc.com/2021/03/26/personal-income-february-2021.html
UNIV OF MICHIGAN SENTIMENT (ForexLive)
“Consumer sentiment continued to rise in late March,
reaching its highest level in a year due to the third disbursement of relief
checks and better than anticipated vaccination progress.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 8:15pm Friday. 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
-Friday the S&P 500 fell
about 1.7% to 3975, a new all-time high.
-VIX fell about 5% to 18.86.
-The yield on the 10-year
Treasury rose to 1.685%.
I’d say we got confirmation
that the pullback is over – we made a new all-time-high on the S&P 500 and
market internals improved significantly for the day!
The chart was a worry though. 50+
points up in the last hour of trading? Can you say panic buying???? Was it a
blow-off top? I don’t know - we’ll find out in the days to come.
Today was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Data shows that a statistically-significant, up-day is followed by a down-day about 60% of the time. Statistically-significant, up-days almost always coincide with tops, but not all statistically-significant, up-days occur at tops. Today could be a top, but other than the market being stretched (as it has been for some time), there are no other top-indicators. We have to suspect that there is more to go in this bull run.
Here’s Friday’s run-down of some important indicators.
These tend to be both long-term and short-term, so they are somewhat different
than the 20 that I report on daily.
BULL SIGNS
-Slope of the 40-dMA of New-highs is rising.
-The Smart Money (late-day action) is now headed up. This
indicator is based on the Smart Money Indicator (a variant of the indicator developed
by Don Hayes).
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA of the % of issues advancing on the
NYSE (Breadth) is above 50%.
-MACD of S&P 500 price made a bullish crossover 26
Mar. (It was bearish for a few days this week.)
-VIX is falling sharply - bullish.
-Distribution warnings. As of yesterday, there had been 9
Distribution days in the last 25-trading days. Today, there was a follow-thru
day that cancels all of the Distribution Days and prints a bull sign.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are
both above the 20-dEMA.
-The size of up-moves has been larger than the size of
down-moves over the last month.
-The S&P 500 is outperforming Utilities ETF (XLU).
NEUTRAL
-Overbought/Oversold Index (Advance/Decline Ratio) is
neutral.
-Bollinger Bands neutral.
-Breadth on the NYSE compared to the S&P 500 index is
neutral.
-The Fosback High-Low Logic Index is neutral.
-RSI.
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means it is leaning bearish.
-The market has broadened out; 5.6% of all issues
traded on the NYSE made new, 52-week highs when the S&P 500 made a new
all-time-high 17 Mar. (there is no bullish signal for this indicator.) Currently,
the value is about average, but this number has been falling. It was almost 16%,
2 weeks ago; then 7%, 7 session ago. If it continues to fall at new-all-time
highs for the S&P 500, it does not bode well for the bull market.
-We’ve seen 5 up-days over the last 10-days. Neutral.
-There have been 11 up-days over the last 20 days.
Neutral
-Statistically, the S&P 500 gave a panic-signal, 27
January. The signal has expired.
-8 Mar, the 52-week, New-high/new-low ratio improved by 3.5
standard deviations very bullish, but the signal has expired.
-There has been 1 Statistically Significant day in the
last 15-days. This signal can be Bearish or Bullish. Now it’s neutral.
-Cyclical Industrials (XLI-ETF) are outperforming the
S&P 500, but the trend is down. Let’s call this one neutral.
-53% of the 15-ETFs that I track have been up over the
last 10-days. (I had a typo I this stat last week. It didn’t change the total
count for last week.)
BEAR SIGNS
-The 10-dMA of issues advancing on the NYSE
(Breadth) is below 50%
-The smoothed advancing volume on the NYSE is falling.
-The S&P 500 is 12.4% above its 200-dMA (Sell point
is 12%.); when Sentiment is considered, the signal is also bearish.
-McClellan Oscillator is negative.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 23 Mar
-Short-term new-high/new-low data is falling.
-Long-term new-high/new-low data is falling.
-My Money Trend indicator is bearish.
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 8
bear-signs and 10 bull-signs. Last week, there were 7 bear-signs and 10
bull-signs.
The list is little changed from last week. More
importantly, we saw some big positive moves today in price and market
internals, including new-high/new-low numbers. The bullish move today cancels
other indicator concerns.
The daily sum of 20 Indicators
improved from -6 to -1 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dropped from +6 to -5
(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 & VIX are bullish; Volume &
Sentiment are neutral.
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
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained NEGATIVE 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.
