“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Faced with a combination of record speculative extremes
and deteriorating speculative conditions, investors may want to remember that
the best time to panic is before everyone else does.” – John Hussman, Phd.
LEADING ECONOMIC INDEX (Conference Board)
“The
Conference Board Leading Economic Index® (LEI)for the U.S.
increased by 0.3 percent in March to 119.8 (2016 = 100), following a 0.6
percent increase in February...“The US LEI rose again in March despite
headwinds from the war in Ukraine,” said Ataman Ozyildirim, Senior Director of
Economic Research at The Conference Board. “This broad-based improvement
signals economic growth is likely to continue through 2022 despite volatile
stock prices and weakening business and consumer expectations.” LEI report available
at...
https://www.conference-board.org/topics/us-leading-indicators/press/us-lei-apr-2022
JOBLESS CLAIMS
Weekly unemployment claims held near their lowest levels
since the 1960s, with a strong labor market and improving levels of
unemployment remaining a bright spot in the U.S. economy...Initial jobless claims, week ended April 16: 184,000
vs. 180,000 expected...” Story at...
https://finance.yahoo.com/news/weekly-jobless-claims-week-ended-april-16-2022-182808572.html
PHILADELPHIA FED INDEX (Advisor Perspectives)
“The latest Manufacturing Index came in at 17.6, down 9.8
from last month's 27.4. The 3-month moving average came in at 20.3, down from
last month...Manufacturing activity continued to expand in the region,
according to the firms responding to the April Manufacturing Business
Outlook Survey. The survey’s indicators for current general activity,
shipments, and new orders declined from last month’s readings but remained
positive.” Story at...
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.5% to 4394. (Powell
said that a 50-basis point {half-%} rate hike is possible for May and that
killed the market.)
-VIX rose about 12% to 22.68.
-The yield on the 10-year Treasury was 2.845%.
PULLBACK DATA:
If the correction has ended:
-Drop from Top: 13% (Avg.= 13% for non-crash pullbacks)
-Days from Top to Bottom: 48-days. (Avg= 30 days top to
bottom for corrections <10%; 60 days top to bottom for larger, non-crash
pullbacks)
Currently:
If the correction has not ended:
Days since top: 75 (Avg= 60 days top to bottom for
>10% non-crash pullbacks)
Drop from Top: Now 8.4%. Max at close: 13%
The S&P 500 is 2.3% BELOW its 200-dMA & 0.4% BELOW
its 50-dMA.
*We can’t call the end of the correction until the
S&P 500 makes a new high. If it makes a new low, then the correction has
obviously not ended.
TODAY’S COMMENT:
The S&P 500 dropped below its 50-dMA again. Can’t those FED guys be quiet? The 50-day is
one of those lines in the sand. We need
to see the Index move above the 50-day ad hold above it to feel better about
this market.
I mentioned yesterday that only 45-days have been up over
the last 100-sessions and that was bullish. I also noted reservations because
in bear markets it appeared that the number could be low for months. I checked the 2000-2002 Bear market and found
it was even worse than I expected.
The Bear Market bottom was in Oct 2002 when there had
been only 41-up days in the prior 100 days. There were also only 41 up-days in
the prior 100 days in Jan 2001 (not shown on the chart below), a year and
10-months earlier. Clearly, this stat alone does not identify bottoms. Numbers
in the low 40’s persisted at various times during the bear market and was in
the 30’s at the first major, bear-market low. Here’s some of the data in the
chart below:
As noted in the chart above, the data does indicate a method to identify/verify bear-market bottoms. So now let’s plot the existing conditions:
Today, the daily sum of 20 Indicators improved from +6 to
+8 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from -37 to -24 (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 20 indicators are short-term so they tend to bounce
around a lot.
The Long Term NTSM indicator HOLD:
VIX is Bullish; VOLUME, SENTIMENT & PRICE are hold.
Today was a statistically significant down-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically-significant, down-day is followed by an up-day about
60% of the time. So perhaps Friday will be more bullish.
I actually see a lot of bull indicators. The Elephant in the room is the Fosback
Hi-Low Logic Index. The McClellan Oscillator dropped below zero, so the Fosback
Hi-Low Logic Index is back in play.
Thursday, Fosback’s Logic Index gave 2 bearish signs: (1)
The daily # hit 5.1%. That means that both new-highs and new-lows were over 5% of
the total issues traded today. That is a rare and bearish sign although it is
not always timely. (2) The 10-dEMA of the Fosback Hi-Low Logic Index was 3.5%
while 2.2% is considered the Bear sign for a short-term move. The only time we
have seen numbers this high has been during corrections. We’re in one now, so these bearish signs don’t
necessarily portend more declines.
The FED stole the punch bowl today. I do not know if that negative sentiment will
hold. As is often the case, we’ll have to wait and see.
I remain a Bear for the long-term – short-term, I am
neutral. Let’s check the Friday rundown of indicators tomorrow.
BEST ETFs - 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.
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
BEST DOW STOCKS - TODAY’S MOMENTUM
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.
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
THURSDAY MARKET INTERNALS
(NYSE DATA)
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 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.
