“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
RETAIL SALES (Bloomberg)
“U.S. retail sales rose in October for a third month,
signaling households continue to spend even with the fastest inflation in
decades. The value of overall retail purchases increased 1.7% last month,
the most in seven months...” Story at...
INDUSTRIAL PRODUCTION (SpectrumNews13/AP)
“U.S. industrial production rebounded in October as
automakers, stung by supply chain problems, posted strong increases and the
adverse effects from a hurricane that struck the nation's energy complex in the
Gulf of Mexico faded. Industrial production rose 1.6% last month after a 1.3%
plunge in September...” Story at...
NAHB HOUSING MARKET INDEX (YahooFinance/Zacks)
“Builder confidence for single-family homes jumped four
points in October, marking the largest monthly increase since last November.
Solid demand trends for homes for the past several months have pushed the
sentiments higher despite persistent supply woes and inflationary pressure.”
Story at...
https://finance.yahoo.com/news/builders-sentiment-marches-ahead-october-142202846.html
INFLATION PEAKING – SENTIMENT GREEDY, GIDDY &
EUPHORIC - EXCERPT (Heritage Capital)
“The bulls enjoyed a nice bounce back on Friday from the
minuscule pullback last week. While it’s not my highest conviction play it
certainly looks like there should a bit more downside to come, and preferably
before the holiday. As I mentioned last week, sentiment is getting to the point
where is about as euphoric, greedy and giddy as it ever gets, rivaling several
spots in the post-2008 bull market as well as the Dotcom era. But before you
assume that the bull market is ending, please, please, please remember that
sentiment alone will not end a bull market. Just like bull markets do not die
of old age, it takes a confluence of factors along the way, usually a
Fed-induced mistake...I know that the CPI just printed its hottest report in 31
years. However, my model does not support higher inflation numbers from
here. ” – Paul Schatz, President, Heritage Capital . Commentary at...
https://investfortomorrow.com/blog/inflation-peaking-sentiment-greedy-giddy-euphoric/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:15 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 about 0.4% to 4701.
-VIX slipped about 0.8% to 16.49.
-The yield on the 10-year Treasury rose to 1.640%.
Sentiment has reached extreme levels, very close to a bearish
signal for this one indicator. I measure Sentiment as %-Bulls
(Bulls/{bulls+bears}) based on the amounts invested in Rydex/Guggenheim mutual
funds.
It is currently at 97%-bulls (as of Monday’s close) on a
5-day basis. Based on standard deviation, this is again equal to levels seen
during the dot.com crash. This isn’t by itself a great indicator since
sentiment can remain elevated for some time, but it is a level that has
preceded pullbacks of varying degrees – from small pullbacks of a couple of
major crashes. We’d need to see more
negative signs to take action, but it is a cautionary indication.
The daily sum of 20 Indicators remained -3 (a positive
number is bullish; negatives are bearish); the 10-day smoothed sum that smooths
the daily fluctuations declined from +18 to +13 (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 BUY. Price & VIX are bullish; Volume & Sentiment are neutral. It’s
always good to remember that the long-term indicator can be “Buy” at a
top. It is designed to signal good
conditions after a bottom. Now it is telling us conditions are good, but it
doesn’t tell us when conditions are too good...for that we look to top
indicators.
Top indicators warn when
conditions are in blow-off top mode. At
this point there are no bearish top indicators, but both Bollinger Bands and
RSI are very close to overbought so we could see a top warning if the index
makes a very strong move higher.
I am cautiously bullish.
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 am still holding 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 remained 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 50% invested in stocks; this is my “normal” fully
invested stock-allocation.
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.
