“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.
JOBLESS CLAIMS (CNBC)
“Initial filings for unemployment insurance fell sharply
last week, indicating continued improvement in the U.S. jobs market, the Labor
Department reported Thursday. First-time jobless claims totaled 364,000 for the
week ended June 26...” Story at...
https://www.cnbc.com/2021/07/01/us-weekly-jobless-claims.html
ISM MANUFACTURING (ISM)
“The June Manufacturing PMI® registered 60.6
percent, a decrease of 0.6 percentage point from the May reading of 61.2
percent. This figure indicates expansion in the overall economy for the 13th
month in a row after contraction in April 2020.” Press release at...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/june/
CONSTRUCTION SPENDING (YahooFinance)
“U.S. construction spending unexpectedly fell in May as
gains in private homebuilding were offset by persistent weakness in outlays on
nonresidential structures and public projects. The Commerce Department said on
Thursday that construction spending dropped 0.3%...” Story at...
https://finance.yahoo.com/news/construction-spending-unexpectedly-falls-may-144442628.html
WARNINGS FROM BEHIND THE CURTAIN (RIA)
“Currently, we are seeing every box checked. Irrational
exuberance from investors, easy credit with investors taking out personal loans
to buy stocks, and risky stocks outperforming. The level of exuberance
currently matches previous major market peaks, the only missing ingredient is a
catalyst to start the reversal. The biggest problem is that investors are
crowded into a theatre with a single exit. When the selling starts, the exit
will become very narrow, very fast.” Commentary at...
https://realinvestmentadvice.com/technically-speaking-warnings-from-behind-the-curtain/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as of 7:00 PM 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 0.5% to 43320.
-VIX slipped about 2% to 15.48.
-The yield on the 10-year
Treasury slipped to 1.455%.
6.6% of issues on the NYSE
made new-highs today and that’s about average when the Index makes a
new-high. That’s a good sign since it
indicates a relatively broad advance at the new-high. That’s confirmed by the 54%
of issues advancing on the NYSE over the last 10 days.
The daily sum of 20 Indicators slipped from +4 to +3 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -36 to -27. (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, Volume, VIX & Sentiment are neutral.
There are currently only 2
top-indicators warning of a top; the Index is stretched too far ahead of its
200-dMA, but just barely; and Bollinger Bands flashed “overbought”, an
indication that the S&P 500 is more than 2 std deviations above the norm.
If RSI also turns overbought we’ll need to consider the possibility of a top.
There have been 6 up-days in a
row; 8 out of the last 10 days have been up-days while 13 out of the last 20
have been up. That’s elevated, and bordering on bearish. Expect a down-day tomorrow.
I’m getting more bullish. It appears that the long malaise, consisting of
a flat Index going back to early May, is ending. In short, it looks like the
Index is breaking out.
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.
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.
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
THURSDAY MARKET INTERNALS
(NYSE DATA)
Market Internals remained BULLISH 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.
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.
