“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“I support the appointment of the Special Counsel on the
Russian collusion allegations after Trump fired James Comey. While I stated
that the Russian collusion allegations were unlikely to be proven as crimes, I
felt the public needed the assurance of an independent investigation. That is
also why I supported the Durham investigation. Now that Durham is confirming
that the Russian collusion allegations were engineered by Clinton campaign
associates, there is a full court press in the media to downplay or ignore the
underlying evidence. The problem is that Durham does
not appear to be done.” - Professor
Jonathan Turley, honorary Doctorate of Law from John Marshall Law School for
his contributions to civil liberties and the public interest. Commentary at...
NFIB SMALL BUSINESS OPTIMISM (NFIB)
“The NFIB Small Business Optimism Index decreased
slightly in October by 0.9 points to 98.2. One of the 10 Index components
improved, seven declined, and two were unchanged. “Small business owners are
attempting to take advantage of current economic growth but remain pessimistic
about business conditions in the near future,” said NFIB Chief Economist Bill Dunkelberg.
“One of the biggest problems for small businesses is the lack of workers for
unfilled positions and inventory shortages, which will continue to be a problem
during the holiday season.” Report at...
https://www.nfib.com/surveys/small-business-economic-trends/
PPI (CNBC)
“Wholesale prices rose 8.6% from a year ago in October,
their highest annual pace in records going back nearly 11 years, the Labor Department
said Tuesday. The government’s producer price index, which serves as a gauge of
final demand prices from goods producers, rose 0.6% for the month...” Story
at...
CHARTING THE STOCK MARKET “MELT UP” & FED NAIVETY
(Real Investment Advice)
“Charting the
stock market “melt-up” in prices, and the Fed’s naivety of the laws of
physics may be of benefit to younger investors. After more than a decade of
rising prices, accelerating markets seem entirely normal, detached from
underlying fundamentals. As a result, new acronyms
like “TINA” and “BTFD” get developed to rationalize surging
prices.
However, a more extended look at price history suggests
the current market environment is anything but typical. More importantly,
the “moral hazard” created by the Federal Reserve’s continuous
bailouts have put individual investors at significant risk.” – Lance Roberts.
Commentary and charts at...
https://realinvestmentadvice.com/charting-the-stock-market-melt-up-the-feds-naivety/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:45 PM Tuesday. 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.
Trend numbers remain essentially flat. At this point, we
worry that the new cases may start rising, but it is too soon to make a call
either way.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dipped about 0.4% to 4685.
-VIX rose about 3% to 17.78. Options players suspect the
markets are headed for a down-day. It won’t go up forever.
-The yield on the 10-year Treasury dipped to 1.441%.
Breadth, % of issues advancing on the NYSE measured on a
100-day basis, is breaking out of its downtrend as indicated in the chart below.
That’s a good sign.
RSI remains overbought. It is currently 84. It has been
overbought for 12 out of the last 13 days, but there aren’t many other bear
signs. One bear-sign is the long uptrend.
The S&P 500 has been up 17 days out of the last
20-days. That is a very rare event that
last happened in 2010. Then, there was no pullback in the markets until several
months later. At one point, I considered this a dangerous enough signal to
consider it a sell for the market. I am not bearish now. In the last
6 years, there have been 4 times when there were 16-days up in the last 20-days
and 9-days up over the prior 10-days (as we have seen recently). There
was a pullback in 3 out of the 4 prior cases, but no major crashes. Breadth
looked good at the all-time high on the S&P 500 Monday, so if we were to
have a pullback it wouldn’t be too large. I will watch other indicators as we
go forward. I don’t see signs of a pullback now.
The daily sum of 20 Indicators declined from +2 to +1 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from +7 to +8 (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 based on the bearish number of up-days over a 10 and
20-day time frame. Price and Volume are bullish; Sentiment and VIX indicators
are neutral.
I remain bullish, but the markets have been too bullish
recently. We’re due for a pause. Bollinger Bands and other topping indicators
are close to issuing a top warning.
I will be cutting back to my normal fully invested
position (50% in stocks) from my current position of 65% in stocks if topping
indicators or other important indicators warn.
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
** XLE has outgained XLY over
the last 2 months so I will continue to hold XLE rather than switching to XLY.
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
Market Internals slipped to HOLD.
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 in the
portfolio is now about 65% invested in stocks; this is above my “normal” fully
invested stock-allocation of 50% stocks. Indicators are very bullish, so I am
holding a short-term position in additional Index Funds to boost returns.
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.
