“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“While we take no pleasure in this announcement, the ADP
executive board has decided to formally censure Senator Sinema as a result of
her failure to do whatever it takes to ensure the health of our democracy.” -
Arizona Democrat party chair, Raquel Terán.
Arizona
Democrats censure Kyrsten Sinema for voting rights failure (msn.com)
In 2017, “U.S. Senators Susan Collins (R-ME) and Chris
Coons (D-DE) led a bipartisan group of 61 Senators in writing to Senate
leadership, urging them to preserve the 60-vote threshold for legislation.
"This letter demonstrates that a majority of the Senate, both Republicans
and Democrats, can come together to protect an important tradition of the
Senate that recognizes the rights of the minority and makes bipartisan
legislation more likely,” said Senator Collins...“We have a long way to go
to heal the wounds between our two parties, but this letter is a small first
step towards that important goal." – The letter was Signed by 31 Democrats.
https://mishtalk.com/economics/the-democrats-hypocritical-assault-on-the-filibuster
IHS MARKIT COMPOSITE MANUFACTURING / SERVICES PMI (IHS Markit)
“US private sector firms signaled a marked slowdown in
growth at the start of 2022 amid softer demand conditions, worsening supply
chain disruptions and labor shortages linked to the Omicron wave. Adjusted for
seasonal factors, the IHS Markit Flash US Composite PMI Output Index posted
50.8 in January, down notably from 57.0 in December...The slowdown in output
growth was broad-based, with both manufacturing and service sector firms
reporting near-stalled output as the steep spike in virus cases associated with
the Omicron wave meant ongoing supply issues and labor shortages were
exacerbated by renewed pandemic related containment measures.” Report at...
https://www.markiteconomics.com/Public/Home/PressRelease/c4392f13105a4995984fc407bfac69e9
MARKETS COULD FALL 20% OR MORE (MarketWatch)
“Prominent market technician Ralph Acampora says the
recent bout of market volatility has him uneasy and now he’s forecasting a
deeper drop in a market that has already delivered a significant bruising to
Wall Street in the first few weeks of 2022...’I’ve lived through too many bear
markets,” he said via phone, noting that the lengthy bullish run for stocks,
which has been primarily fueled by easy-money policies from the Federal Reserve
to combat COVID, may be coming to a conclusion.’” Story at...
CAPITULATION (Investopedia)
“By definition, capitulation means to surrender
or give up. In financial circles, this term is used to indicate the point in
time when investors have decided to give up on trying to recapture lost gains
as a result of falling stock prices... if the majority of investors decide to
capitulate and give up on...[a]...stock, then there will be a sharp decline in
its price. When this occurrence is significant across the entire market, it is
known as market capitulation...The problem with capitulation is that it is very
difficult to forecast and identify. There is no magical price at which
capitulation takes place. Often, investors will only agree in hindsight as to
when the market actually capitulated.” Full definition at...
https://www.investopedia.com/terms/c/capitulation.asp
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:00 PM ET 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.
If we focus on the box in the above chart we can see (below) that the 10-dMA of new-cases and the smoothed 10-day may have peaked.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose
about 0.3% to 4410.
-VIX rose about 4% to 29.9.
-The yield on the 10-year Treasury rose to 1.771%.
I noted Friday that we would be watching for a possible
turning Tuesday. Jeepers. Did we have a turning Monday?
Capitulation should occur on accelerating losses into the
close on high volume. Did we see that today? Hardly! The markets collapsed in the morning and then rallied and
actually finished in positive territory. Not only did the markets not exhibit
capitulation, it didn’t even record a lower-low to test the prior low. It is
not likely that today’s action represented an end to this pullback.
Pullback Data
Days since top: 14 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: 8.1% (Avg.= 13% for non-crash pullbacks)
The S&P 500 is 0.5% below its 200-dMA.
The daily sum of 20 Indicators improved from -7 to -6
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -58 to -56 (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
remained SELL. Volume & VIX are bearish; Price & Sentiment are Neutral.
The important sell-signal was 12 Jan. Today is just a reminder that conditions
remain bearish.
I remain a Bear. Still, I’ll
watch for clues that might indicate that the correction is over. As of now, I expect a bounce to last a couple
of days and then a return to selling. If we get a decent bounce, I am more
likely to be a seller than a buyer.
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.
My stock-allocation in the
portfolio is now about 35% invested in stocks. This is close to 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.
