“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.
"The notion that I ever sought a Presidential pardon
for myself or other Members of Congress is an absolute, shameless, and soulless
lie." - Republican Rep. Scott Perry
The Jan 6 Committee says it will present evidence to the
contrary.
ANEMIC HIGH-YIELD BOND A-D- LINE (McClellan Financial Publications)
“Looking at this A-D Line longer term, we can see that it
has shown us divergent top indications at all of the major tops... and thus far
this A-D Line is not showing us an “all-clear” signal. There is more work
yet for the market to do, to dismantle the excesses built up during QE4.”
Analysis and charts at...
https://www.mcoscillator.com/learning_center/weekly_chart/anemic_high-yield_bond_a-d_line/
MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell about 3.9% to 3750.
-VIX rose about 23% to 34.02.
-The yield on the 10-year Treasury rose to 3.364%
PULLBACK DATA:
-Drop from Top: 21.8% as of today. 21.8% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 111-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 15.5% BELOW its 200-dMA & 10.4%
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.
MY TRADING POSITIONS:
XLE
The only positive stock in the
DOW 30 today was McDonalds (MCD). During
downturns, if you can’t afford a fancy restaurant, head to Mickey D's.
TODAY’S COMMENT:
Volume was 20% higher than the monthly average and about
20% higher than yesterday’s test level. Today wasn’t a bottom.
This is FED week. The Fed is meeting 14-15 June. The past 2 meetings have not surprised the
markets and the S&P 500 closed strongly higher on the second day of each
the prior two FED meetings. We need to go all the way back to 26 Jan to find a
day when the markets didn’t like the FED message. That may not be the case this
time.
PPI is due tomorrow morning. That may be more important than the FED. A
good inflation surprise might make investors more confident about the FED
meeting announcement Wednesday.
I stepped in it badly when I went leveraged-long last
week. With a Breadth-Thrust and 3
consecutive 80% up-volume-days it sure looked like the markets were headed
higher. That was not to be and
I took a painful hit to the trading portfolio, Thursday, Friday and Monday. I
normally don’t like to sell on a big down-day because there is usually a bounce
the day-after – not this time. I sold Monday morning early.
Today, I figured the markets would be down big after the
weak opening; they were, so I traded with 3x leverage. Unfortunately, I got stopped-out around
mid-day. I reset the trade late in the
day because I expected that the markets would fade into the close (no one wants
to be long before the PPI announcement tomorrow). I was right and I managed to finish well, but
not as well as I would have liked for the day overall.
Today was another 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.
Only 2% of volume was up-volume today. That’s the second
in the last 3 days. When a downturn has two,
90% down-volume days, the downtrend usually persist until there is a 90% up-volume
day. That’s another bottom-sign that we can look for. (Today’s down-volume day
didn’t meet all of the tests, but given the extreme low for up-volume, I think it’s
a valid high, down-volume day.)
Today, the daily sum of 20 Indicators dropped from -2 to
-4 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations dropped from +110 to +89. (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 remained SELL: PRICE and SENTIMENT are neutral; VOLUME and
VIX are bearish.
One can’t be bullish today.
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
MONDAY 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.
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.
