“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
PPI (CNBC)
“Prices at the wholesale level jumped twice the expected
level in January...The producer price index, which measures final demand goods
and services, increased 1% for the month, against the Dow Jones estimate for
0.5%. Over the past 12 months the gauge rose an unadjusted 9.7%...” Story at...
https://www.cnbc.com/2022/02/15/producer-price-index-january-2022-.html
My cmt: “Twice the expected level” and the markets were
up. That’s a bullish sign. Perhaps
market participants are tired of inflation. On the other hand, the announcement
by Russia that some troops would be withdrawn from the Ukraine border may be
the reason for the bounce.
EMPIRE STATE MANUFACTURING (Kitco.com)
"Wednesday, the regional central bank said that its Empire
State manufacturing survey's general business conditions index rose to a
reading of 3.1 in February, up from January's drop to -0.7 However, the data
was weaker than expected...” Story at...
THE STOCK MARKET CORRECTION IS INCOMPLETE (Business
Insider)
“This year's selloff in stocks has a way to go before
it's finished as the market looks vulnerable to slowing economic growth, said
Morgan Stanley on Monday in a note that also highlighted lower earnings
expectations among Wall Street analysts... the duration and depth of this
incomplete correction will be determined by how much growth disappoints, in our
view," said equity strategists led by Michael Wilson.” Story at...
My cmt: Interesting to see what one Pro thinks about the
correction. The following is the
bull-side.
TOM LEE REMAINS BULLISH (Business Insider)
“Lee remains steadfast in his belief that the stock
market will see a rally in February, even as investors navigate rising
geopolitical tensions between Russia and Ukraine, along with higher interest
rates and corporate earnings reports. "We still see a case for a rally in
February... the key factors are the rapid rises of cash, the plunge in
sentiment, the waterfall decline in stocks, and the general bearishness of
markets," Lee concluded.” Story at...
Stock
Market Outlook: No Alternative to Stocks Despite Rising Rates
(businessinsider.com)
My cmt: Always good to hear from Tom Lee. He made similar
comments on CNBC not long ago.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1.6% to 4402.
-VIX fell about 9% to 25.77.
-The yield on the 10-year Treasury rose to 2.048%.
Given that most corrections retest their prior lows, I’ll
keep the pullback stats for a while.
Pullback Data:
Days since top: 30 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: Now 6.8%; Max closing: 9.8%; Max intraday:
12% (Avg.= 13% for non-crash pullbacks)
The S&P 500 is 0.4% ABOVE its 200-dMA & 2.9%
below its 50-dMA.
Max Retracement from bottom: 56% 2 Feb.
The slope of the 200-dMA is up, but just barely.
The daily sum of 20 Indicators improved from -10 to -9 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations dropped from +27 to +9 (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
improved to HOLD. VIX is bearish; Price, Volume & Sentiment are Neutral.
The Russell 2000 is not far from exceeding its recent
correction high. I have been watching the Russell as a tell for the market. If
it can break higher it would be a bullish sign. The S&P 500 would need to
rise 2.6% to get back to its double-top high. A significant break above 4589 for
the S&P 500 would make me a buyer.
If the Ukraine situation becomes clearer, I think it would
go a long way toward ending this correction.
I am bearish, but we’ll see. Markets are getting bounced around
by the news.
POSITIONS ADDED:
Wednesday, 26 January: AAPL; XLE;
Monday, 31 January: QLD; SPY
POSITIONS SOLD:
QLD, 10 February.
APPL, 11 February
SPY, 14 February
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
A basket of 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 about 40% invested in stocks. This is below 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. If I can see
a definitive bottom, I’ll add a lot more stocks to the portfolio using an
S&P 500 ETF.
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.
