“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
YIELD CURVE STEEPENING (McClellan Financial Publications)
“...corporate profits should continue to improve
throughout 2021 and into 2022. Having the economy open back up again
after Covid starts to abate should no doubt help to fuel this recovery. If and
when the Fed starts to wake up to the inflation monster that the Fed has
fueled, and starts to increase short term rates in response, then that
de-steepening of the yield curve is going to matter for small caps and for the
larger economy.” Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/yield_curve_steepening_and_small_caps/
My cmt: Even a reduction in Bond Buying (tapering the QE)
is likely to result in a very negative reaction in the stock market.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:00pm Tuesday. 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
-Tuesday the S&P 500 fell
about 0.8% to 3870.
-VIX rose about 3% to 24.1.
-The yield on the 10-year
Treasury rose to 1.405%.
Not much to report today. Some
profit taking was expected, but it was disconcerting to see the S&P 500 give
up all of its gains in the last hour of trading.
We also had extremely high,
unchanged-volume on the NYSE. Some feel that when the NYSE volume is high for
stocks sold without a change in price, it signals investor confusion and a
possible turning point. I’ve tried to
develop an indicator based on this without much success.
Could this be a turning point
indicating a continuation of the pullback? Sure, but I still suspect that the
trend will be up for a while.
The daily sum of 20 Indicators improved from -4 to -3 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations dipped from -43 to -47 (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.
I remain bullish; I bumped stock investments to 60% of
the portfolio today.
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
Market Internals improved to 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.
