“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
“People always ask me what is going on in the markets. It
is simple. Greatest Speculative Bubble of All Time in All Things. By two orders
of magnitude.” – Michael “Big Short” Burry.
“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.
FOMC RATE DECISION (NYTimes)
“Federal Reserve officials left policy unchanged on
Wednesday but moved up expectations for when they would first raise interest
rates from rock bottom, a sign that a healing labor market and rising inflation
were giving policymakers confidence that they would achieve their full
employment and stable price goals in coming years. Fed policymakers expect to
make two interest rate increases by the end of 2023...” Story at...
https://www.nytimes.com/2021/06/16/business/economy/fed-meeting-inflation.html
The FED has made no decision regarding cutting back Bond
purchases (QE).
HOUSING STARTS / PERMITS (Reuters)
“U.S. homebuilding rebounded less than expected in May as
very expensive lumber and shortages of other materials continued to constrain
builders’ ability to take advantage of an acute shortage of houses on the
market. The report from the Commerce Department on Wednesday also showed
permits for future home construction falling to a seven-month low.” Story at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 7.4 million barrels from the
previous week. At 466.7 million barrels, U.S. crude oil inventories are about
5% below the five year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:30 PM Wednesday. 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
-Wednesday the S&P 500
dipped about 0.5% to 4224.
-VIX rose about 7% to 18.15.
-The yield on the 10-year
Treasury rose to 1.580%.
Top signals have cleared;
there are positive signs in the long-term indicators while short-term indicators
remain flat. The Index is 1.1% above its 50-dMA and only about 0.7% below its
all-time high. I don’t see too much to get excited about at this point.
The daily sum of 20 Indicators remained zero (a positive
number is bullish; negatives are bearish); the 10-day smoothed sum that smooths
the daily fluctuations dropped from +61 to +54. (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.
I am bullish until we see more
bearish signs.
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
I usually buy the top momentum player and sell it when the stock drops out of the top 3 in momentum. GS is close, but I will continue to hold it for the time being.
WEDNESDAY 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 25 May, my stock-allocation
is about 50% invested in stocks. I am not super bullish, but I am not bearish
either so 50% is a reasonable allocation for me.
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.
