“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.
FED BEIGE BOOK (Fox Business)
“In its region-by-region roundup of anecdotal information
known as the Beige Book, the Fed reported that economic
activity slowed in four of its 12 districts during the
mid-April through May period that the report covers as firms continued to
struggle with rising prices, a lack of available workers and disruptions from
COVID-19...Although inflationary pressure remained "strong" over the
past few months, the Beige Book said that three Fed districts reported a
moderation in prices for some goods and services.” Story at...
ISM MANUFACTURING INDEX (Institute for Supply Management)
“The report was issued today by Timothy R. Fiore,
CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing
Business Survey Committee: "The May Manufacturing PMI® registered
56.1 percent, an increase of 0.7 percentage point from the reading of 55.4
percent in April. This figure indicates expansion in the overall economy for
the 24th month in a row after a contraction in April and May 2020. This is
the second-lowest Manufacturing PMI® reading since September 2020,
when it registered 55.4 percent.” Press release at...
JOLTS JOB OPENINGS (CNBC)
“Job openings fell by nearly half a million in April,
narrowing the historically large gap between vacant positions and available
workers, the Bureau of Labor Statistics reported Wednesday.
The openings total declined by 455,000 from the upwardly
revised March number to 11.4 million in April
JAMIE DIMON SAYS “BRACE YOURSELF” FOR AN ECONOMIC HURRICANE
(CNBC)
“There are two main factors that has Dimon worried:
So-called quantitative tightening, or QT, is scheduled to begin this month and
will ramp up to $95 billion a month in reduced bond holdings. The other large
factor worrying Dimon is the Ukraine war and its impact on commodities,
including food and fuel. Oil could hit $150 or $175 a barrel, he said.” Story
at...
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dropped about 0.8% to 4101.
-VIX slipped about 2% to 25.69.
-The yield on the 10-year Treasury rose to 2.914%.
PULLBACK DATA:
-Drop from Top: 14.5% as of today. 18.7% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 103-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 7.9% BELOW its 200-dMA & 3.8 %
BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500
makes a new-high; however, we hope to be able to call the bottom when we see
it...and...we did call the market a trading “Buy” one day after the recent
trading-bottom on 12 May (a little early)...
MY TRADING POSITIONS:
QQQ - SOLD
UWM - SOLD
XLE
DOW
TODAY’S COMMENT:
As I posted earlier, I sold UWM (2xRussell 2000) today. I
also decided to sell QQQ late this afternoon. I am still in the opinion that we
are in a full-on bear market. I don’t think the U.S. can avoid recession. There
are just too many issues and the FED is required to hike rates aggressively to
fight inflation and reduce its balance sheet by selling Bonds. That process (Quantitative Tightening) started
today. Still, I’ll remember the motto of this Blog – “Trade what you see; not
what you think.” i.e., trade the indicators.
The S&P 500 may make my target of the 50-dMA (now 4250)
for this rally or not. The Index stalled
at its upper trend line. If it breaks thru its upper trend line, I may add to
stocks. I’ll just wait and see. The S&P
500 closed about 4% below its 50-dMA today.
Today, the daily sum of 20 Indicators declined from +13
to +7 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations declined from +80 to +78. (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.
LONG-TERM INDICATOR: The Long
Term NTSM indicator was HOLD: SENTIMENT & PRICE are bullish; VIX is
bearish; and VOLUME is hold. Only 46
days out of the last 100 have been up-days; that leans bullish.
I am Neutral in the short-term and Bearish longer-term.
The rally faded a little this week. That would be
expected after the big move higher; but it bothers me that the Index stalled at
the upper trend line. That’s about a 35%
retracement and is very close to the Fibonacci 38% retracement for those who
believe in that sort of thing. These leave us with the possibility that the
rally is over. I don’t want to lose money in a bear market trade. Let’s see if
we can break above the trendline.
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
WEDNESDAY 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 roughly 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.
