“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“In light of the total bias and dishonesty of the January
6th Unselect Committee of Democrats, two failed Republicans, and the Fake News
Media, I am canceling the January 6th Press Conference at Mar-a-Lago on
Thursday.” – Former President Trump.
My cmt: The above statement makes no sense. If you
believed those things, you would want to set the record straight and have a
press conference. On the other hand, if you’re under investigation, it’s best
to keep your mouth shut. Perhaps this time Trump is listening to his lawyers.
Incredibly bad numbers for President Biden. Trump’s last
approval bottomed at 34% shortly before he lost the 2020 election. Biden may
make a run at those numbers.
“While no one knows what 2022 holds in store for
investors, our concern is that it should not foster the same optimism as 2021.
The economic and financial environments are shifting rapidly making the 2022
outlook much more difficult than this past year.” - Michael Lebowitz, CFA.
FOMC MINUTES (CNBC)
“As expected, the Federal Reserve’s policymaking group
kept its benchmark interest rate anchored near zero. However, officials also
indicated that they foresee up to three quarter-percentage-point increases in
2022, as well as another three hikes in 2023 and two more than the year after
that. In addition, the committee announced it would speed up the tapering pace
of its monthly bond-buying program. Under the new plan, the program would now
end around March...” Story at...
https://www.cnbc.com/2022/01/05/fed-minutes-december-2021.html
My cmt: Markets fell sharply after the announcement at 2
PM and closed very near the low for the day.
ADP EMPLOYMENT CHANGE
Private sector employment increased by 807,000 jobs from
November to December according to the December ADP® National Employment ReportTM.” Story at...
https://finance.yahoo.com/news/adp-national-employment-report-private-131500751.html
IHS MARKIT SERVICES PMI (IHS Markit)
“US services providers registered another steep expansion
in business activity at the end of 2021, according to the latest PMI data. The
upturn eased slightly to the slowest for three months, but was supported by a
sharper increase in new business. The rise in new orders was the fastest for
five months...” Report at...
https://www.markiteconomics.com/Public/Home/PressRelease/407ef6783b8047b0af4ac0ff226d736e
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 2.1 million barrels from the
previous week. At 417.9 million barrels, U.S. crude oil inventories are about
8% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
SEAN HANNITY TRIED TO GET TRUMP TO ABANDON JAN 6 STRATEGY
(msn.com)
“Several days before the Capitol riot, Fox News host Sean
Hannity sought to deter former President Donald Trump from trying to use
January 6 to overturn the election results, according to texts revealed Tuesday
by the House committee probing the insurrection. The texts indicate that
Hannity, a prominent supporter of the former president, held direct knowledge
about Trump's strategy for the day of the electoral vote count and harbored
concerns toward the plan...” Story at...
My cmt: Looks like the Jan 6 Congressional Committee is
turning up some real dirt.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 7:00 PM ET Wednesday. 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.
There was a drop in new cases today. We’ll see if that
trend continues.
I am still sick with remnants from Omicron. A lot of coughing today. I am improving. Today is day 10.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell about 1.9% to 4701
-VIX rose about 12% to 18.93
-The yield on the 10-year Treasury rose to 1.706%.
Markets didn’t like the Fed announcement today and
dropped more than 2% after their 2PM release of last meeting minutes. Indicators
were again trumped by the news.
There are not a lot of bear signs yet, but the 50-dMA of
issues advancing on the NYSE (breadth) is still below 50% and has remained
below 50% since the middle of December.
That’s the “definition” of a pullback, but it has been a confusing sign since
the 10-dMA of breadth has been moving up strongly recently and was overbought for
a couple of days, until today.
One troubling sign is that new52-week-highs and new-52-week-lows
were both high, today. That feeds into the Fosback New-Hi/New-low Logic Index.
Although it is not giving a warning yet, it is a concerning trend. The market is not healthy when both new-highs
and new-lows are elevated.
Another bad sign is something we noted a while back. Utilities have been outperforming the S&P
500 indicating that investors were taking a defensive posture going into the
new year. (The spread is shown in Red. A falling line indicates outperformance
by the XLU {Utilities}).
The daily sum of 20 Indicators declined from +6 to -2
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from +8 to +16 (The
trend direction is more important than the actual number for the 10-day value.)
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 declined to HOLD. Price, Volume, VIX & Sentiment are Neutral.
Indicators are concerning but
not clearly bearish yet, so I am Neutral until we see some more clues about where
the markets are headed.
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
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
Market Internals declined 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 50% invested in stocks; this is my “normal” fully
invested stock-allocation of 50%. I trade about 15-20% of the total portfolio
using the momentum based analysis I provide here.
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.
