CORONAVIRUS (NYTimes)
“South Korea reported 229 new coronavirus cases on
Saturday, doubling its total in a single day and adding to concerns that
another Asian country is losing control of the disease and that
the window to avert a pandemic was closing. As of Saturday, the virus had
spread to 28 countries. Some 1,500 cases have been confirmed outside China;
multiple infections in Italy, Iran and the United Arab Emirates; and one in Egypt,
the first to be confirmed on the African continent. Spikes in infections were
also reported in the United States, which now has 34 cases, with
more expected.” Story at…
My cmt: It still seems likely that COVID-19 will have a
significant negative impact on stock markets, at least that’s my take. Most of
the Pros and talking heads on CNBC seem to think that it is no big deal. They may be right, so we'll just watch the markets.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 dropped about 1.1% to 3338.
-VIX rose about 10% to 17.08.
-The yield on the 10-year Treasury slipped to 1.475.
It’s Friday so it’s time for a run-down of Bull/Bear
signs:
BEAR SIGNS
-Cyclical Industrials are underperforming the S&P 500
and Utilities are outperforming the Index, both suggesting investors are worried.
Not only that: Utilities are outperforming the Technology Sector (XLK) over the
last 40-days!
-The S&P 500 is too far above its 200-dMA when
sentiment is considered.
-At the S&P 500 recent top, Breadth vs the S&P
500 index was very close to the bear side as it indicated that the Index was too
far ahead of most stocks on the NYSE. This didn’t give a bear signal, but it was
close.
-New-high/new-low data is falling.
-VIX jumped sharply higher recently and is now giving a
bearish signal.
-MACD of stocks advancing on the NYSE (breadth) made a
bearish crossover Friday.
-MACD of S&P 500 price made a bearish crossover
Friday.
-Money Trend has reversed down – a bearish sign.
-The size of down-moves has been larger than the size of up-moves
over the last month.
-The smart money has been selling based on late-day action.
NEUTRAL
-Overbought/Oversold Index, a measure of advance-decline
data, is neutral.
-RSI is in the mid-zone solidly neutral.
-Bollinger Bands are in the neutral zone.
-Statistically, the S&P 500 is neutral.
-Sentiment is extremely elevated, but it is not giving a
sell signal.
-The Fosback High-Low Logic Index is neutral, but it is
climbing in the bear direction and is on the bear side of neutral.
BULL SIGNS
-The 5-10-20 Timer is BUY, because the 5-dEMA and the
10-dEMA are above the 20-dEMA.
You don’t have to be a mathematician to note that bull-signs
have been shrinking over the last 2-weeks. The daily sum of indicators is somewhat
different than the above list; it follows below.
The daily sum of 20 Indicators remained -7 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that negates the daily fluctuations declined from +11 to -1. (These
numbers sometimes change after I post the blog based on data that comes in late.)
Most of these indicators are short-term.
Not much change in my guess: Based on the overstretched
S&P 500 and the preponderance of bear signs above, I am expecting a dip –
not huge, but perhaps in the 5-10% zone. (It could always be worse if we get
bad news and the coronavirus, COVID-19, seems to be taking its toll on tech
stocks.)
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: -1
Most Recent Day with a value other than Zero: -1 on 21
February (The S&P 500 was too far above its 200-dMA when sentiment is
considered.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher is a Buy
Sign.
MOMENTUM ANALYSIS:
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
*For additional background on the ETF ranking system see
NTSM Page at…
TODAY’S 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…
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
NEUTRAL on the market.
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. In 2014, using these internals alone would
have made a 9% return vs. 13% for the S&P 500 (in on Positive, out on
Negative – no shorting).
Using the Short-term indicator in 2018 in SPY would have
made a 5% gain instead of a 6% loss for buy-and-hold. The methodology was Buy
on a POSITIVE indication and Sell on a NEGATIVE indication and stay out until
the next POSITIVE indication. The back-test included 13-buys and 13-sells, or a
trade every 2-weeks on average.
My current stock allocation is about 45% invested in
stocks as of 27 January (down from 60%). This is a conservative position
appropriate for a retiree based on an overstretched S&P 500. You may wish
to have a higher or lower % invested in stocks depending on your risk
tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Friday, the VIX indicator
gave a bear signal; VOLUME, PRICE, and SENTIMENT Indicators were neutral. The Long-Term Indicator remains HOLD.
