“Ultimately, the only way the Taliban and al Qaeda can
retake Afghanistan is if America abandons the country. Allowing the extremists
to reclaim power would force Afghan women back into subservience, remove girls
from school, and betray all the gains of the past nine years. After the Cold
War, the United States gave up on Afghanistan. The result was chaos, civil war,
the Taliban takeover, sanctuary for al Qaeda, and the nightmare of 9/11. To
forget that lesson would be a dreadful mistake.” - President George W. Bush,
2010 Memoir, “Decision Point.”
Today's Front page WSJ: WARNINGS GROW OF AUTUMN STOCK PULLBACK
(WSJ)
“After a record-breaking bull run for the U.S. stock
market this year, many Wall Street analysts are starting to warn that investors
could be in for a bumpy ride in the coming weeks and months.”
MORE STRATEGISTS SAY STORM IS BREWING IN THE US STOCK
MARKET (YahooFinance)
“Strategists from almost all the top Wall Street banks
have come out this week with a nervous message about the U.S. stock market...
“The risk that the correction is hard is growing,” wrote Deutsche Bank equity
strategists including Binky Chadha... Andrew Sheets, cross-asset strategist at
Morgan Stanley: “We are going to have a period where data is going to be weak
in September at the time when you have a heightened risk of delta variant and
school reopening.” The bank cut U.S. equities to underweight and global stocks
to equal-weight on Tuesday.” Story at...
https://finance.yahoo.com/news/deutsche-team-sees-risk-hard-025920070.html
My cmt: The article included many other bearish comments
by the big banks.
STOCKS DANGEROUSLY OVERVALUED (msn.news)
US stocks are priced for perfection following a robust
year of post-pandemic earnings growth, but high valuations suggest a sharp
market sell-off could be imminent, according to a Thursday note from Deutsche
Bank. On nearly every valuation metric, US stocks are trading at
"historically extreme" levels, according to the bank....Historical
data shows that when valuations have gotten to such high levels in the past,
five-year forward returns were on average negative.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 8:00 PM Monday. U.S. total case numbers are on the left axis; daily
numbers are on the right side of the graph in Red with the 10-dMA of daily
numbers in Green.
I added the smoothed 10-dMA of new cases (in purple) to
the chart. One can see it is off its peak, so perhaps we have seen the worst of
the Delta-variant. Unfortunately, I suspect we may see another peak as Delta
moves to other areas – hope I am wrong.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 was up about 0.2% to 4469.
-VIX dipped about 8% to 19.37.
-The yield on the 10-year Treasury slipped to 1.326%.
It’s getting hard to find a bullish article on the stock
market. Just see the collection of bearish commentary in the articles I linked
above. As I’ve noted many times, when everyone thinks the market will go in a
certain direction, it is more likely to do the opposite. Still, even with today’s
upward move in price, we did see bearish deterioration of indicators.
The daily sum of 20 Indicators declined from -5 to -10 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations declined from -12 to -22. (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. VIX, Volume, Price & Sentiment indicators are neutral.
Friday, the S&P 500 closed
only 0.8% above its 50-dMA. That’s where
these dips have stopped recently. With the FED’s QE still in play, corrections
have been few and far between. So, we can look at indicators for clues. What we
see is mostly bearish signs with the 50-dMA of the % of issues advancing on the
NYSE still stitting below 50%. That’s a bearish sign. There were bullish indications, too (as we
noted in Friday’s run-down).
I’m still more bearish for now,
but none of my long-term indicators are bearish today. Let’s see what Mr.
Market does tomorrow.
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 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.
My stock-allocation is now
about 45% invested in stocks; this is slightly below my “normal” fully invested
allocation of 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 general rule, some
suggest that the % of portfolio invested in the stock market should be one’s
age subtracted from 100. So a 30 year
old person would have 70% of the portfolio in stocks, stock mutual funds and/or
stock ETFs. That’s ok, but for older
investors, I usually don’t recommend keeping less than 50% invested in stocks
(as a fully invested position) since most people need some growth in the
portfolio to keep up with inflation.
