Hedge
fund manager Anthony Scaramucci said on CNBC that the chance of recession is
greater than 75%.
John
Hussman, PhD, commented a while back that he thinks many of the economists who
are interviewed by the media just take a guess at the chance of recession. His
view: the odds are near 100% that we will have a recession and that is based on
his rigorous analysis (http://www.hussmanfunds.com).
FedEx
reported slowing shipments today and that isn’t a good sign either. With recession winds blowing, the long term
(over the next 6-months to a year) doesn’t look good. Readers here aren’t surprised, because we
have been talking about the risk of recession for some time.
In
the near term, I’m taking a contrary view.
I went long for about 20% of the trading portfolio at the close
today. The two big down days yesterday
and today (and both were big enough to meet the NTSM test for “statistically
significant”) could lead us to a bounce.
Also “Breadth” (a moving average of the %-of stocks advancing) equaled
the low that we had at the low from last July and it even is equivalent to the
2009 panic bottom low.
The S&P 500 dropped below the 8 August 1119 low on the S&P 500 this
afternoon (Thursday) and moved up from there late in the day to close at 1130. A lot of people may consider that a good sign
and buy the market. I am in that camp
too (at least for the short term), but today’s test was on very high volume and
that indicates that selling is not over.
In other words, we still need to test the 1119 closing value with low
volume to convince us to go back into the market in a big way.
Today,
Thursday, the Navigate the Stock Market analysis remained SELL.
I sold on the 27 July sell signal at S&P 500 1301 and I am
defensively positioned with only a small amount of my portfolio invested in
stocks. (Zero stocks in the 401k.) (See the page “How to
Use the NTSM System” – the link is on the right side of this page).
I
am 20% long in the trading portfolio. This
is a “toe-in-the-water” position, though, and I will dump it quickly if we don’t
move up. (The total amount in the trading portfolio is never more than 10% of
net worth. If I lose it all – I’ll
survive.)
