“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.
PPI (CNBC)
“Companies paid much higher prices to producers in April
for everything from steel to meat in another sign of inflation in an economy
rapidly recovering from the pandemic...The Producer Price Index rose 0.6% from
March, according to the U.S. Bureau of Labor Statistics. Year over year, the
PPI spiked 6.2%, the largest increase since the agency started tracking the
data in 2010.” Story at...
https://www.cnbc.com/2021/05/13/producer-prices-april-2021.html
JOBLESS CLAIMS (Yahoo Finance)
“Initial unemployment claims dropped more than expected
to a fresh pandemic-era low, with new filings inching back toward pre-pandemic
levels as more vaccinated Americans return to work and in-person activities... Initial jobless claims, week
ended May 8: 473,000 vs. 490,000 expected...” Story at...
https://finance.yahoo.com/news/weekly-jobless-claims-week-ended-may-8-2021-174616833.html
MORE POLITICAL MUSINGS
Yesterday I posted: “‘Sen. Lindsey Graham said Monday
that it was "impossible" for the Republican Party to progress without
former President Donald Trump as its leader...’
My cmt: After Trump’s seditious, stolen-election lies,
the fools in the Republican Party think Trump must be its leader? They are
flushing the center. In this country, one can’t be elected President, or to the
Senate, without the center...the House? Yes, but nowhere else.”
On reflection, in some partisan states it is possible to
be elected to the Senate without the center, but I stand by my earlier comment
about presidential politics: It is not possible to be elected President without
the center. The WSJ noted today that Republicans cannot elect a President
without Trump, because he holds sway over a large Republican block of voters.
That may be true.
If the Republicans had banded together and told the truth (the election
was not stolen) they might have expunged Trump from the Party. Since they didn’t, I’d say the Republicans
are screwed. (BTW, I am Libertarian, I dislike both Democrats and Republicans.)
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 4:30pm 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 rose
about 1.2% to 4113.
-VIX dropped about 16% to 3.12.
-The yield on the 10-year
Treasury slipped to 1.659% as of 4:30pm.
Even though the markets
bounced higher today, I didn’t see any indication that would suggest that the
bottom was yesterday, Wednesday. It
could’ve been the bottom, but there’s little evidence in my indicators that it
was. We saw a good bounce in advancing
stocks on the NYSE (that’s a bullish sign), but new-high/new-low data was really
bad today. By my measures, it was worse today than at yesterday’s low. Bottom
line, I expect more downside ahead unless we see some bullish action Friday
that would change my mind.
A trip to the 200-dMA seems
more likely now that we have some more bad news to shake investor confidence. Today’s
PPI number was not good and that’s after the bad CPI number yesterday. The
200-dMA is 3697, 11.2% below today’s close. It doesn’t have to happen. The
S&P 500 has remained above its 50-dMA (4056). We’ll watch in the coming
days to see if the 50-dMA holds.
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. We’ve now had 4 statistically significant days
in a row and a down-day followed by an up-day. This sort of back-and-forth
movement is typical of corrections.
Investors bought Utilities
today and they outperformed the S&P 500; that is not a bullish sign.
The daily sum of 20 Indicators
declined from -11 to -13 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dropped from -14 to
-34 (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 SELL. Volume and the Panic Indicator are negative; Price, VIX &
Sentiment are neutral. This signal is iffy since the Panic indicator can be bullish
at a bottom or bearish at a top. Until I see evidence of a bottom, I will leave
the SELL indication in place.
During the QE period after the
Financial crisis, I didn’t pay attention to the Long-Term indicator until the
S&P 500 fell more than 5%. As of today, we are down 2.8% from the top. I
probably won’t sell any more unless the Index closes below the 50-dMA and stays
there for at least 2 days.
I am already at a conservative stock allocation of only
40% in stocks so I am watching the 50-dMA to make a determination whether to
reduce stock allocations further.
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 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 19 April, my
stock-allocation is about 40% invested in stocks. I hadn’t intended to drop
this low, but I took profits in both Boeing and Intel due to their dropping out
of the top 3 in momentum. I’ll move back in when conditions appear more
favorable.
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.
