“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“While the media often denounces “misinformation” or
“disinformation” (and even supports
censorship in some cases), it rarely acknowledges its own
distortions from the Russian
collusion scandal to the Hunter Biden
laptop controversy to the Lafayette
Park incident. Indeed, after the [Rittenhouse] verdict, many of
these same figures doubled down in denouncing the decision without
acknowledging the evidence supporting the reasonable doubt of these jurors.” - Professor
Jonathan Turley, honorary Doctorate of Law from John Marshall Law School.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 2:30 PM Friday. 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.
Numbers are low today, because I’m getting the data early and
also because reporting was low on Thanksgiving.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 2.3% to 4595.
-VIX jumped about 54% to 28.62.
-The yield on the 10-year Treasury dropped to 1.479%.
My Calm-Before-the-Storm indicator has been warning of a
big down-day for 2 weeks, so we were not surprised to see today’s 2%+ drop. Today, we got the drop and the indicator switched
to a Panic Indicator. The Panic
Indicator can be bullish, because panics happen at bottoms, or it can be bearish
as fear sweeps into the maket. Now, it
is probably bearish, because the charts do not show the S&P 500 to be at its
lower trend line, although a bounce Monday would not be surprising.
The Friday run-down of some important indicators remained
sharply to the bear side (16-bear and 4-bull) and was slightly more bearish
than last Friday. These indicators tend to be both long-term and short-term, so
they are different than the 20 that I report on daily. Details follow:
BULL SIGNS
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is above 50%.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA
are both above the 20-dEMA.
-Overbought/Oversold Index (Advance/Decline Ratio) is oversold.
-Bollinger Bands are oversold.
NEUTRAL
-3.5% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high, 18 November. This is close
to bearish, but is Neutral. (There is no bullish signal for this indicator.)
This is bearish.
-24 November, the 52-week, New-high/new-low ratio
improved by 1.75 standard deviations, somewhat bullish, but Neutral.
-There have been 13 up-days over the last 20 sessions –
Neutral.
-There have been 5 up-days over the last 10-sessions –
Neutral.
-Non-crash Sentiment indicator is very bearish, but not
enough to send a bullish signal.
-There have been 3 Statistically-Significant days in the
last 15-days – too low to send a signal. This can be a bull or bear.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to send a signal.
-The Fosback High-Low Logic Index is neutral.
-RSI is close to oversold, but remains neutral.
-The S&P 500 has had 3 Distribution Days in the last
25-days (including today) – Neutral.
-The S&P 500 is 7.1% above its 200-dMA (Bear
indicator is 12%.). This value was 15.9% above the 200-dMA when the 10%
correction occurred in Sep 2020.
-The Smart Money (late-day action) is relatively flat so
I’ll call it Neutral. (This indicator is based on the Smart Money Indicator
developed by Don Hayes).
-Breadth on the NYSE compared to the S&P 500 index.
-The S&P 500 is out-performing the Utilities ETF
(XLU), but the trend is bouncing around – call it neutral for now.
BEAR SIGNS
-More than 90% of the volume today was down-volume. While it didn’t quite meet all of the tests
for a bearish, high down-volume day, it was close enough. That’s bearish, but a
second 90% down-volume day before we see new highs would confirm a down-trend
and be even more bearish.
-Slope of the 40-dMA of New-highs is down. This is one of
my favorite trend indicators.
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is below 50%.
-The 100-dMA % of issues advancing on the NYSE
(Breadth) is below 50%
-McClellan Oscillator.
-VIX is rising sharply.
-Long-term new-high/new-lows are falling.
-Short-term new-high/new-low data is falling.
-Cyclical Industrials (XLI-ETF) are under-performing the
S&P 500.
-The Calm-before-the-Storm Indicator was warning; now it’s
a Panic Indicator suggesting more to come since the Index is not at its lower
trend line.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 11 November.
-MACD of S&P 500 price made a bearish crossover, 15
November.
-My Money Trend indicator is falling.
-The smoothed advancing volume on the NYSE is falling.
-There were 5 Hindenburg Omen signals 17-24 November. These won’t be canceled until the McClellan Oscillator
turns positive.
-43% of the 15-ETFs that I track have been up over the
last 10-days.
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there
are 16 bear-signs and 4 bull-signs. Last week, there were 15 bear-signs and
5 bull-signs.
The daily sum of 20 Indicators fell from -2 to -13 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations declined from -61 to -71 (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term so they tend to bounce around a lot.
The Long Term NTSM indicator
ensemble slipped to HOLD. Price, Volume & Sentiment are neutral; VIX is
Bearish.
It still looks like markets
are in a pullback. Market action early next week will be critical to get a
better idea of where we are headed.
I am bearish in the short-term
based on today’s (Friday’s) indicator run-down. In the long-term, it seems
unlikely that a major crash is coming soon, but it is not impossible.
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
FRIDAY MARKET INTERNALS (NYSE
DATA)
Market Internals declined to SELL.
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.
I did take profits in high momentum stocks/ETFs on 19 Nov. This has temporarily dropped my stock
allocation. I’ll be a buyer as soon as
we can see an end to the current weakness in indicators.
My stock-allocation in the
portfolio is now about 35% invested in stocks; this is well my “normal” fully
invested stock-allocation and is probably overly conservative.
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.
