“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 (YahooFinance)
“First-time unemployment filings in the U.S. rose more-than-expected in
a report out Thursday, reaching 229,000 during the week ended June 4...’The
trend probably is rising, but it is not alarming,’ Ian Shepherdson, chief
economist at Pantheon Macroeconomics...” Story at...
https://finance.yahoo.com/news/jobless-claims-hit-five-month-june-4-140804241.html
ANOTHER CASE OF JUDGES WRITING LAW – JUDGES RULE BEES ARE
FISH (WSJ)
“What is black, yellow and coated in pollen? Bumblebee,
you say? A panel of top judges in California reviewed the matter and came up
with fish, a judgment sending ripples across the state...the text of
California’s 1970 endangered-species law...affords special protection to any
endangered “bird, mammal, fish, amphibia or reptile.” Bees, farmers said,
shouldn’t be included.” Story at...
https://www.wsj.com/articles/when-is-a-bumblebee-a-fish-when-a-california-court-says-so-11654611927
Supreme court Justice Scalia wrote that Judges must
follow the text and not apply their own prejudices or try to guess what the
Legislature meant. He would have said that it might make sense to protect Bees,
but the Legislature didn’t when they wrote the law 50 years ago; therefore,
Judges have no right to include a class of animals that were not in the original
text. That’s the principle of “textualism” in interpreting the Law. The
Legislature can always “fix” the law if they choose.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 2.4% to 4018.
-VIX rose about 9% to 26.09.
-The yield on the 10-year Treasury rose to 3.046%.
PULLBACK DATA:
-Drop from Top: 16.2% as of today. 18.7% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 109-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 9.6% BELOW its 200-dMA & 4.6%
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 although that turned
out to be a little early.
MY TRADING POSITIONS:
SSO*
XLK*
UWM*
I’ll sell quickly if the rally appears to be failing.
XLE
DOW
TODAY’S COMMENT:
Ouch...all of my trades are underwater and internals
looked bad today. It was a weak day until l about 2PM. That’s when the bottom collapsed and the S&P
500 fell more than 1-1/2% into the close. The day went from weak to downright
bad.
Volume has remained relatively low. Today, volume was about 15% below the monthly
average. That suggests this recent selloff
is not yet generating panic. On the
other hand, today’s volume was uniformly down; more than 90% of the volume was
down-volume. One 90% down-volume day is not a major worry. If there is a
second, it would be very bearish and suggest investors have reverted back to
selling - rally over.
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. This could also signal
a reversal back to the upside.
The number of advancing issues on the NYSE vs. the
S&P 500 continues to show that advancing issues are significantly ahead of
the Index. That divergence remains bullish.
Inflation Consumer Price Index (CPI), Core CPI and Michigan
Consumer Sentiment are due tomorrow. Friday’s news will probably determine the
fate of the rally.
Today, the daily sum of 20 Indicators dropped from +16 to
+4 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations dropped from +134 to +127. (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 slipped to HOLD: PRICE is bullish; SENTIMENT & VOLUME
and VIX are neutral.
Given the number of bearish warning signs Thursday, I’ll
sell XLK, SSO and UWM trading positions on Friday unless we see a positive day.
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 roughly 55% invested in stocks. This is slightly above my “normal” fully invested stock-allocation of 50%. I am calling this defensive because my current positions are trading positions – not long-term holds. We need to be very vigilant now to avoid losses in future declines.
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.
