“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
“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.
“I never imagined that I would see the day that the
Chairman of the House Judiciary Committee would step forward to call for raw [Supreme]
court packing. It is a sign of our current political environment where rage
overwhelms reason.” - Professor Jonathan Turley, honorary Doctorate of Law from
John Marshall Law School for his contributions to civil liberties and the
public interest.
INFLATION FORCES INVESTORS TO SCRAMBLE FOR SOLUTIONS
(WSJ)
“Signs that inflation is picking up momentum are adding a
new dimension to the post-lockdown market rally, forcing investors to make
difficult decisions about how to protect their portfolios from the emerging
threat.” Story at...
https://www.wsj.com/articles/inflation-forces-investors-to-scramble-for-solutions-11621762380
EPIC SET OF ALLIGATOR JAWS (Felder Report)
“...when you look at the historical weighting within the
S&P 500 Index, energy still comprises a smaller portion than it did 20
years ago, at the dawn of its last major bull market, and tech and
communications services are just below their all-time highs set back then at
the peak of the DotCom Mania.”
Commentary at...
https://thefelderreport.com/2021/05/19/an-epic-set-of-alligator-jaws/
Bottom line: It looks like Energy may have further to
run. I continue to hold XLE (Energy Select ETF).
INFLATION AND IMPLOSION (USAWatchdog)
“I am looking down the road, and in early 2022, I am looking
for something close to a hyperinflationary circumstance and effectively a
collapsed economy.” - Economist John Williams, founder of ShadowStats.com. Commentary
at...
https://usawatchdog.com/inflation-implosion-hyperinflation-in-2022-john-williams/
GROWING EVIDENCE THAT COVID ORIGINATED IN A LAB (CNBC)
“Evidence that Covid-19 originally leaked from a Wuhan
virology lab is growing, Dr. Scott Gottlieb told CNBC Monday, pointing to
reports that three researchers from the lab sought hospital care with a
Covid-like illness in November 2019... Scientists still haven’t found
definitive proof that the virus came from an animal, he said. With other
coronaviruses, SARS and MERS, researchers were able to identify the animal
those diseases emerged from at this point in those outbreaks.” Story at...
UNSETTLED: WHAT CLIMATE SCIENCE TELLS US ABOUT GLOBAL
WARMING AND WHAT IS DOESN’T, BY STEVEN E. KOONIN (RealClearEnergy)
“Koonin’s indictment of The Science starts with its
reliance on unreliable computer models...One particularly jarring feature is
that the simulated average global surface temperature,” Koonin notes, “varies
among models by about 3°C, three times greater than the observed value of the
twentieth century warming they’re purporting to describe and explain.” Another
embarrassing feature of climate models concerns the earlier of the two
twentieth-century warmings from 1910 to 1940, when human influences were much
smaller. On average, models give a warming rate of about half of what was
actually observed...“That the models can’t reproduce the past is a big red flag
– it erodes confidence in their projections of future climates.” Neither is it
reassuring that for the years after 1960, the latest generation of climate
models show a larger spread and greater uncertainty than earlier ones –
implying that, far from advancing, The Science has been going backwards. That
is not how science is meant to work.” Book Review at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:00pm 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 rose
about 1% to 4197.
-VIX dropped about 9% to 18.40.
-The yield on the 10-year
Treasury dipped to 1.603%.
The daily sum of 20 Indicators
improved from -5 to -2 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations rose from -58 to -57
(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. Price is Bullish; Volume, VIX, & Sentiment are
neutral.
The 2 topping-indicators currently
bearish are:
-Breadth on the NYSE compared to the S&P 500 index is
bearish – the Index is too far ahead of stocks advancing on the NYSE.
-The S&P 500 is 12.6% above its 200-dMA (Sell point
is 12%.). This value was 15.9% above the 200-dMA when the 10% correction
occurred in Sep 2020.
These 2 have been negative for
a long time and investors haven’t been bothered. With the FED liquidity and the
Politicians providing stimulus checks, overbought conditions may continue.
I remain neutral on the stock market. Indicators are
reasonably flat; price action isn’t helping to sway me in either direction –
big moves in one direction (like today) invite reversals the next day. It’s a
worry that the S&P 500 has gone nowhere in more than a month. Indicators
are not suggesting a pullback is coming, but indicators are not particularly
bullish, either.
The 5-10-20 Timer System
improved to BUY today since the 5-dEMA and 10-dEMA are both above the 20-dEMA.
That’s a reasonably good signal although it is subject to whipsaw reversals.
I am at a conservative
stock-allocation of 45% in stocks, but depending on the action tomorrow, I may increase
my stock allocation in the portfolio to 50%.
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 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.
As of 19 April, my
stock-allocation is about 40% invested in stocks. Depending on the action tomorrow,
I may increase my stock allocation in the portfolio to 50%.
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.
