“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Far more money has been lost by investors in preparing for
corrections, or anticipating corrections, than has been lost in the corrections
themselves.” - Peter Lynch, former manager of Fidelity’s Magellan®
fund.
WHAT DOES WARREN BUFET KNOW THAT WE DON’T? (Business
Insider via msn)
“Buffett's company grew its mountain of cash, Treasury
bills, and other liquid investments to an unprecedented $325 billion between
July and September 30, or $310 billion if you subtract nearly $15 billion of
payables for Treasury bill purchases. Berkshire's cash pile was below $110
billion two years earlier. The legendary investor and his team sold $36 billion
of shares and only made purchases worth $1.5 billion, marking their eighth
straight quarter as net sellers.” Story at...
Warren
Buffett's Berkshire Hathaway hoarded cash, sold stocks, and halted buybacks
ahead of the election
MARKET REPORT / ANALYSIS
-Monday the S&P 500 declined about 0.3% to 5713.
-VIX rose about 0.5% to 21.98.
-The yield on the 10-year Treasury declined (compared to
about this time, prior trading day) to 4.301%.
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows. Added more 9/20.
SSO – added 10/16.
SPY – added 9/19 & more 10/16
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 16 gave Bear-signs
and 5 were Bullish. The rest are neutral. (It is normal to have a lot of
neutral indicators since many of the indicators are top or bottom indicators
that will signal only at extremes.)
The daily Bull/Bear, 50-Indicator spread (Bull Indicators
minus Bear Indicators, red curve in the chart above) improved to -11 (11 more
Bear indicators and Bull indicators).
TODAY’S COMMENT:
Today’s Bull-Bear spread of -11 is bearish. The 10-dMA of
the 50-Indicator Spread (purple line in the chart above) remained bearish since
it is still moving lower. (I follow the 10-dMA for trading buy-signals and as
an indicator for sell signals.)
In addition to the 4 bull signs we saw Friday, a smoothed
up-volume indicator has turned bullish and the daily spread improved from -12
to -11. If we look back at the previous
five lows in the above chart, we note that the indicator-spread has bottomed when
the S&P 500 bottomed. That would indicate that the pullback is probably over.
The S&P 500 closed only slightly higher than its
50-dMA on Thursday and again on Monday; that is more evidence that the weakness
is over.
The election is weighing on investors.
BOTTOM LINE
I’m neutral on the markets, even though the indicators
are bearish. Evidence increased that the weakness is finished, or close to
finished. I may be adding to stocks Tuesday. It depends on market action.
If the daily bull-Bear spread improves I’ll probably
increase stock holdings.
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking
follows:
The top ranked ETF receives
100%. The rest are then ranked based on their momentum relative to the leading
ETF.
*For additional background on
the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
DOW STOCKS - TODAY’S MOMENTUM RANKING
OF THE DOW 30 STOCKS (Ranked Daily)
The top ranked Stock receives
100%. The rest are then ranked based on their momentum relative to the leading Stock.
For more details, see NTSM
Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
MONDAY MARKET INTERNALS (NYSE
DATA)
My basket of Market Internals improved to HOLD. (My basket of Market
Internals is a decent trend-following analysis that is most useful when it
diverges from the Index.)
...My current invested
position is about 60% stocks, including stock mutual funds and ETFs. I’m
usually about 50% invested in stocks when markets are stretched. (75% is my max
stock allocation when I am confident that markets will continue higher.)
I trade about 15-20% of the total portfolio using the
momentum-based analysis I provide here. When I see bullish signs, I add a lot more
stocks to the portfolio, usually by using an S&P 500 ETF as I did back in
October 2022 and 2023.
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Far more money has been lost by investors in preparing for
corrections, or anticipating corrections, than has been lost in the corrections
themselves.” - Peter Lynch, former manager of Fidelity’s Magellan®
fund.
Political commentary from Michael Ramirez at...
https://michaelpramirez.com/index.html#/
PAYROLL REPORT / UNEMPLOYMENT RATE (Morningstar)
“The US economy added 12,000 jobs in October, according
to the latest report
from the Bureau of Labor Statistics... The unemployment rate held steady at
4.1%... The BLS said job growth was likely depressed by the two hurricanes that
hit the southeast in October. In addition, strike activity was a detractor.”
Story at...
https://www.morningstar.com/economy/october-us-jobs-report-12000-rise-payrolls-likely-depressed-by-hurricanes
ISM MANUFACTURING (prnewswire)
"The Manufacturing PMI® registered 46.5 percent
in October, 0.7 percentage point lower compared to the 47.2 percent recorded in
September. This is the lowest Manufacturing PMI® reading in 2024. The
overall economy continued in expansion for the 54th month after one month of
contraction in April 2020. (A Manufacturing PMI® above 42.5 percent,
over a period of time, generally indicates an expansion of the overall
economy.)” Press release at...
https://www.prnewswire.com/news-releases/manufacturing-pmi-at-46-5-october-2024-manufacturing-ism-report-on-business-302293215.html
CONSTRUCTION SPENDING (Forest Economic Advisors)
“A closer look at the US Census Bureau’s construction
spending report for September, with a focus on residential spending and
additional analysis provided by the National Association of Home Builders
(NAHB), reveals that private residential construction spending trended up
0.2%. Year-over-year, construction spending was 4.1% higher.” From...
https://getfea.com/end-use/us-private-residential-construction-spending-increases-0-2-in-september
MARKET REPORT / ANALYSIS
-Friday the S&P 500 declined about 0.4% to 5729.
-VIX declined about 6% to 21.88.
-The yield on the 10-year Treasury rose (compared to
about this time, prior trading day) to 4.386%.
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows. Added more 9/20.
SSO – added 10/16.
SPY – added 9/19 & more 10/16
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 16 gave Bear-signs
and 4 were Bullish. The rest are neutral. (It is normal to have a lot of
neutral indicators since many of the indicators are top or bottom indicators
that will signal only at extremes.)
The daily Bull/Bear, 50-Indicator spread (Bull Indicators
minus Bear Indicators, red curve in the chart above) declined to -12 (12 more
Bear indicators and Bull indicators).
TODAY’S COMMENT:
Today’s Bull-Bear spread of -12 is bearish. The 10-dMA of
the 50-Indicator Spread (purple line in the chart above) remained bearish since
it is still moving lower. (I follow the 10-dMA for trading buy-signals and as
an indicator for sell signals.) There’s worse news – there were only 4 bull
indicators. 2 of those are related to
breadth. Breadth has been weak on a
shorter 10-day trend, but it has been OK on longer term measures. The other 2
bull signs are: (1) XLU (Utilities) are underperforming the S&P 500 and (2)
the statistical-analysis that I mentioned yesterday is suggesting a bottom due
to the large down-day at the 50-dMA.
There were other bear signs, today there was another Hindenburg
Omen (https://www.investopedia.com/terms/h/hindenburgomen.asp).
As we’ve noted before, the Omen sends a lot of false warnings.
The Fosback New-high/new-low Logic indicator uses a
similar analytic approach, but it is closer to buy than sell, so I won’t get
too worried about the Hindenburg signal.
I think the biggest worry now is the declining daily, bull-bear
spread. We have seen that if the number of Bull-indicators drops to zero, the
stock performance that followed has been dismal. On a positive note, the
S&P 500 closed only slightly higher than its 50-dMA on Thursday and that
may be enough to put an end to the weakness.
BOTTOM LINE
As noted yesterday:
I’m neutral on the markets, even though the indicators
are bearish. I suspect that the weakness is close to finished. That’s not a
well-informed opinion – there’s not much evidence yet, other than the chart and
a couple of statistical indicators. We may have to wait until the election is
over before the market get’s out of its funk.
If the daily bull-Bear spread improves I’ll probably
increase stock holdings.
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking
follows:
The top ranked ETF receives
100%. The rest are then ranked based on their momentum relative to the leading
ETF.
*For additional background on
the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
DOW STOCKS - TODAY’S MOMENTUM RANKING
OF THE DOW 30 STOCKS (Ranked Daily)
The top ranked Stock receives
100%. The rest are then ranked based on their momentum relative to the leading Stock.
For more details, see NTSM
Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
FRIDAY MARKET INTERNALS (NYSE
DATA)
My basket of Market Internals remained SELL. (My basket of Market
Internals is a decent trend-following analysis that is most useful when it
diverges from the Index.)
...My current invested
position is about 60% stocks, including stock mutual funds and ETFs. I’m
usually about 50% invested in stocks when markets are stretched. (75% is my max
stock allocation when I am confident that markets will continue higher.)
I trade about 15-20% of the total portfolio using the
momentum-based analysis I provide here. When I see bullish signs, I add a lot more
stocks to the portfolio, usually by using an S&P 500 ETF as I did back in
October 2022 and 2023.
