“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.
ISM NON-MANUFACTURING INDEX (ISM via PR newswire_
“The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the
Institute for Supply Management® (ISM®) Services Business Survey
Committee: "In March, the Services PMI® registered 58.3 percent, 1.8
percentage points higher than February's reading of 56.5 percent....
"According to the Services PMI®, 17 industries reported growth. The
composite index indicated growth for the 22nd consecutive month after a
two-month contraction in April and May 2020.
Growth continues for the services sector, which has expanded for all but two of
the last 146 months. There was an uptick in business activity in March, but
respondents have indicated that they continue to be impacted by capacity
constraints, logistical challenges and inflation. Labor shortages have eased
slightly...” Press release at...
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 1.3% to 4525.
-VIX rose about 13% to 13.25.
-The yield on the 10-year Treasury rose to 2.556%.
I think the correction is over, but not everyone agrees
so I’ll keep the pullback data for a while longer.
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:
Days since top: 64 (Avg= 60 days top to bottom for
>10% non-crash pullbacks)
Drop from Top: Now 5.7%. Max at close: 13%
The S&P 500 is 0.8% ABOVE its 200-dMA & 2.4%
ABOVE its 50-dMA. (Lets’ hope the Index remains above these benchmark moving averages.
TODAY’S COMMENT:
I am not convinced the rally is over. To end the rally, I
would have expected a big up-day with Bollinger Bands, RSI and maybe even a few
more top-indicators sending warnings. We got none of that. Until I see top-signs, I am going under the
assumption that this ongoing dip is just profit taking and a normal retreat following
the straight-up move we have seen from the March lows. If the markets continue down, I would,
of course, reconsider. Overall, indicators have weakened, but are not yet in “sell”
mode.
The Fosback Hi/Low Logic Index has again pushed very near
to a sell-signal. That indicator warns
when new 52-week highs and 52-week lows are both large numbers. As I’ve noted
before, Fosback said a sell-signal by this indicator warned of a coming “crash.”
It’s not always correct. The extreme new-low numbers may be a holdover from the
recent correction. Still, if it continues
in a bearish direction, I’ll have to take it seriously. Utilities (XLU-ETF) continue
to outperform the S&P 500; that is a worrying sign, too.
Today, the daily sum of 20 Indicators declined from +2 to
-3 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations declined from +98 to +81 (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
ensemble slipped to HOLD: PRICE is Bullish; VOLUME, VIX & SENTIMENT are
hold.
Today was a big move down, so
maybe this will mark the end of this decline? I don’t know, we’ll see.
Until proven otherwise, I remain a Bull in the
near-term.
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
TUESDAY 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 60% invested in stocks. This is above 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.
