“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.
JOBLESS CLAIMS (FoxBusiness)
“The number of Americans filing for unemployment benefits unexpectedly
climbed higher last week, hitting the highest level since February as soaring
inflation and a persistent labor shortage weighed on businesses... applications
for the week ended April 30 rose to 200,000 from an upwardly revised 181,000 a
week earlier, missing the 182,000 forecast by Refinitiv analysts.” Story at...
https://www.foxbusiness.com/economy/jobless-claims-coronavirus-pandemic-april-30-2022
PRODUCTIVITY (CNBC)
“Worker productivity fell to start 2022 at its fastest
pace in nearly 75 years while labor costs soared as the U.S. struggled with
surging Covid cases,
the Bureau of Labor Statistics reported Thursday. Nonfarm productivity, a
measure of output against hours worked, declined 7.5% from January through
March...” Story at...
PRODUCTIVITY DEFINITION (Investopedia):
“Labor productivity measures the hourly output of a
country's economy. Specifically, it charts the amount of real gross domestic
product (GDP) produced by an hour of labor.” From...
https://www.investopedia.com/terms/l/labor-productivity.asp
CORONAVIRUS (NTSM)
New US cases popped up over 100,000 on Wednesday and are
rising. I am not concerned since the
current iteration of the virus seems to be relatively mild so it should have
little direct effect on the markets. China is probably a different
story. They have little immunity; their
vaccinations were not as effective as in US; they probably have several
versions of the virus ongoing including the original, dangerous one. Their
shutdowns will have a negative effect on the world economy and inflation. Fewer
supplies and strong demand adds to inflation.
CHINA RESTRICTIONS HURTING BIG BUSINESS (CNBC)
“Starbucks, Apple and other major U.S.-listed companies
have warned in quarterly earnings reports about the impact of China’s Covid
lockdowns to their business.” Story at...
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 3.6% to 4147 and in
the process gave up all of yesterday’s gain.
-VIX jumped about 23% to 31.20.
-The yield on the 10-year Treasury rose to 3.043%.
PULLBACK DATA:
-Drop from Top: 13.9% as of today. 13.9% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 85-days. (Avg= 30 days top to
bottom for corrections <10%; 60 days top to bottom for larger, non-crash
pullbacks)
The S&P 500 is 7.6% BELOW its 200-dMA & 5.2%
BELOW its 50-dMA.
*We can’t be sure that the correction is over until the
S&P 500 makes a new high; however, we hope to be able to call the bottom
when we see it.
TODAY’S COMMENT:
More than 90% of the volume was down-volume today. By itself,
a single 90% down-volume day is not too bearish and it may even signal an end
to smaller corrections. On the other
hand, a second 90% down-volume day in this downturn would be very bearish since
it would confirm the down-trend and likely lead to significantly lower prices.
Today’s low may have been close enough to be considered a
test of the prior low of 4131; however, internals were weak and I don’t
consider it a successful test. There was enough down action today that I
suspect there will be a bullish bounce Friday.
I noted recently that whenever the Overbought/Oversold
Index (Advance-Decline Ratio) has been oversold, the S&P 500 has bounced
the next day. As of today, this indicator has called the next-day move
correctly 12-straight times. Thursday was oversold again, so that suggests an up-day
for Friday. Will the streak continue?
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.
Today, the daily sum of 20 Indicators improved from -1 to
zero (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations declined from -17 to -25. (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
remained HOLD: is bullish; VOLUME is bearish; PRICE, SENTIMENT & VIX are
hold.
The length of this correction could mean that it will go
much lower to match up with previous long corrections – say 20%? This isn’t a
prediction – just a worry. Only time
will tell...
No bottom yet on the S&P 500. I did hear CNBC’s Jon
Najarian point out that trading volumes in Tech were
off-the-chart high and that suggested to him that Tech may have made a bottom
Thursday. In my experience, the major indices tend to move mostly together, so
I am not sure about that call. Let’s see if the S&P 500 can successfully
retest the low.
I remain a Bear.
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
My only current trading
position is in the Energy XLE-ETF.
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.
