Stocks Expensive ... Foreign Investors ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...
“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.
"One thing that we've heard is that a lot of the
tariff impact to date has actually not shown up in the numbers yet. There's
been a lot of front-running, building inventories and all those sorts of
things. And we are hearing from an increasing number of businesses that those
strategies ... are starting to run their course...If these pre-tariff
strategies have run their course, we're about to see some changes in prices,
and then we're going to learn how consumers are going to respond to that."
– Raphael Bostic, Atlanta Fed Chair at the Atlanta Fed conference in Florida.
HOW EXPENSIVE ARE STOCKS (WSJ)
“The market has absorbed the early blows of President
Trump’s tariffs, making up all its lost ground. Yet that rekindles a Wall Street worry
from earlier this year: By the typical measures, stocks look very pricey right
now... The most common applications of this metric compare stock prices with a
company’s past 12 months of corporate earnings, analysts’ expectations for its
next 12 months of earnings or so-called cyclically adjusted earnings: the
average annual earnings of the past 10 years, adjusted for inflation...
...Just because stocks look expensive by these
measures doesn’t mean they are about to plunge. In periods such as
the Roaring ’20s and the 1990s tech bubble, frothy markets defied gravity for
years.” Story at...
https://www.wsj.com/finance/stocks/stock-valuations-investors-76d1daa6
FOREIGN INVESTORS BAILING? (MoneyWise)
“U.S. stocks had been outperforming the rest of the world
for years — until a slew of tariffs and trade policies spooked investors and
caused global markets to plunge in March. Now, some foreign investors are
rethinking their exposure to U.S. markets. That’s according to economic expert
Rebecca Patterson, who previously served as Bridgewater’s chief investment
strategist, on an episode of CNBC’s Fast Money.” Story at...
Foreign
investors losing faith in the US
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 declined about 1.6% to 5845.
-VIX rose about 15% to 20.87.
-The yield on the 10-year Treasury rose to 4.597%
(compared to about this time prior market day).
MY TRADING POSITIONS:
XLK-sold 5/21
SPY-sold 5/28
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators
I track, 6 gave Bear-signs and 15 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.)
TODAY’S COMMENT
“Stocks sold off on Wednesday, pressured by a sharp
spike higher in Treasury yields as traders grew worried that a new
U.S. budget bill would put even more stress on the country’s already large
deficit.” - CNBC
My cmt: Could be. It’s always difficult to pin market
moves directly on news.
The daily, bull-bear spread of 50-indicators declined,
but remained bullish at +9 (9 more Bull indicators than Bear indicators) I
consider 5 neutral. The 10-dMA of the spread turned down late in the day – a bearish
sign suggesting a possible reversal down.
I took profits in my trading positions, dropping my
invested position to about 40%. This may
be too conservative, but it was a late day decision based on the 10-dMA of my
50-indicator spread. That stat had been flat
until I checked it around 3:30 so I sold. There’s a lot of complacency in the
markets. I noted (somewhere) that Jim
Kramer was telling his faithful to ignore the market issues and buy-buy-buy. He
might be right, but everyone is in that camp now, so I worry. Tariffs look like
an inflation maker. Bond markets seem to be worried about the Federal deficit,
although they haven’t worried about deficits for 10-years. Are they really
worried now? I don’t know, but my mantra is caution and preservation of capital.
Sorry I didn’t have time to post this before my stock sales.
Wednesday 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.
BOTTOM LINE
I am neutral. Let’s see where the indicators go.
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
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
My basket of Market Internals remained 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 40% stocks, including stock mutual funds and ETFs so I am conservatively positioned. 50% invested in
stocks is a normal position for me. (75% is my max stock allocation when
I am confident that markets will continue higher; 30% in stocks is my Bear
market position.)
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.
