“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“While even the
Washington Post has admitted that it got the Russian collusion story wrong in
light of the findings of
Special Counsel John Durham, House Intelligence Committee Chair Adam
Schiff, D-Calif., is still insisting that he was absolutely right to promote
the discredited Steele dossier. Schiff’s
interview on NBC’s Meet the Press may be the final proof of the
death of shame in American politics.” - Professor Jonathan Turley, honorary
Doctorate of Law from John Marshall Law School.
PENDING HOME SALES (FOX Business)
“Pending home sales rebounded in October, motivated by
fast-rising rents and an anticipated increase in mortgage rates.
According to the National Association of Realtors' pending home sales
index, which tracks the number of homes that are under contract to be sold,
rose 7.5% to a reading of 125.2, but are down 1.4% year-over-year.” Story
at...
CASS FREIGHT INDEX (CASS Information Systems)
“The shipments component of the Cass Freight Index® was
0.8% higher than the year-ago level in October, similar to the 0.6% y/y
increase in September...Freight volumes remain capacity-constrained, as shown
by declining rail volumes and the ongoing backlog of containerships at anchor
waiting to unload, but the 2.9% m/m improvement shows a modest rebound as
restocking demand remained elevated. A pickup in automotive volumes likely also
helped, as October rail carloadings in the motor vehicle category rose about
15% m/m.” Report at...
https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/october-2021
MY cmt: Freeight volumes don’t seem to be rebounding
much.
BAD NEWS FOR THE BULLS (McClellan Financial Publications)
“The NYSE’s Ratio-Adjusted Summation Index (RASI) has
just had a failure at the +500 level, and that spells trouble for the
uptrend...The existence of the current RASI +500 failure...does not tell us by
itself how bad things might get, nor how long the unpleasantness may
last. It is just saying that right now, the bulls do not have their act
together, and we should expect the rocket to fall back to earth in the weeks to
come.” Commentary and analysis at...
https://www.mcoscillator.com/learning_center/weekly_chart/rasi_failed_at_500_bad_news_for_bulls/
My cmt: I calculate the McClellan Oscillator daily, but I
have not spent any time with the Summation Index or this ratio adjusted version
of the Summation Index. The Summation
Index is just a running total of the McClellan Oscillator. The ratio accounts
for the different numbers of issues traded over the years. I’ll take a look at
these indicators. For now, this is another bear sign.
COVID VARIANT OMICRON CASES MILD SO FAR (YahooFinance)
“Symptoms linked to the omicron coronavirus variant have
been mild so far, said South African health experts, including the doctor who
first sounded the alarm about the new strain. But the World Health Organization
cautioned there is “no information” symptoms caused by omicron are different
from other strains...The 13 omicron cases identified in the Netherlands on
Sunday suggest the new variant already has a strong foothold in Europe, with
more countries reporting cases.” Story
at...
https://finance.yahoo.com/news/u-k-buying-time-mideast-111736790.html
My cmt: “Moronic” is an anagram for Omicron – that seems
to be a good adjetive to describe the response to the Omicron variant if the
above report about mild cases is correct. Media fearmongering continues – the
real story will take a while to discern.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as of 6:00 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.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 1.3% to 4655.
-VIX dropped about 20% to 28.62.
-The yield on the 10-year Treasury rose to 1.500%.
The talking heads on CNBC are all saying that Friday was
a knee-jerk reaction and Friday’s market action doesn’t indicate where the
market should be. Perhaps, but my
indicators were very weak well before the Friday decline and today the numbers
weren’t overly bullish.
Advancing issues exceeded declining issues, that’s good,
but up-volume was only 48% of today’s volume and 52-week lows outpaced
new-highs by 90 issues (35 to 125). Chartwise, the Index never got low enough
to be near its 50-dMA. I’d expect a
retreat at least to the 50-day.
And today, a new warning flashed: the 10-dMA of New-lows
is greater than New-highs and the Fosback Logic Index is leaning bearish. This is more of a wake-up call than a bearish
indicator, but it is warning that we need to be mindful and not get complacent
about this market.
Today was a statistically significant up-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically-significant, up-day is followed by a down-day about
60% of the time.
Given that Friday’s run-down of some important indicators
remained sharply to the bear side (16-bear and 4-bull) and we didn’t have a
silver bullet moment today, I am not joining the buy-the-dip crowd yet.
The daily sum of 20 Indicators slipped from -13 to -14 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations declined from -71 to -85 (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 remained HOLD. Price, VIX, Volume & Sentiment are neutral.
It still looks like markets
are in a pullback. Market action over the next few days will be critical to get
a better idea of where we are headed.
I am bearish in the short-term.
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
MONDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained 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’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.
