“Bottom fishing is still the most expensive sport in the
world.” Scott Minerd, Guggenheim Global Chief Investment Officer.
CORONOVIRUS TREATMENT (Mediaite)
“In a series of tweets Saturday morning, Trump hyped a
cocktail of hydroxychloroquine and azithromycin as a treatment for COVID-19,
despite the very preliminary stages of research into the pairing.” Story at…
My cmt: Predictably this was a mostly negative story
about Trump. Here’s the real scoop from a Doctor on one of the financial sites
I visit.
CORONOVIRUS TREATMENT (InvestorsHub)
“There is hope to defeat COVID 19 but it will take weeks.
Local reports of success are circulating about combo Plaquenil plus
azithromycin X 5 days with clinical signs of resolution. Mylar labs is now
working on making 48 million pills which cost pennies since the drug has been
used for over 70 years and is generic, so is the Z pack!!” – Dr Jerry
My cmt: The good news is that this may be weeks away
since the main concern would be the safety of the drugs for this use.
FRENCH TREATMENTS (WSJ)
“…researchers in France treated a small number of
patients with both hydroxychloroquine and a Z-Pak [azithromycin], and 100% of
them were cured by day six of treatment. Compare that with 57.1% of patients
treated with hydroxychloroquine alone, and 12.5% of patients who received
neither.” Story at…
WHAT IS HYDROXYCHLOROQUINE / PLAQUENIL (Forbes)
“…early testing of hydroxychloroquine [Plaquenil] in
France showed promising results, with results indicating that 50% of patients
that originally tested positive for the virus tested negative after just three
days of treatment. However, though the results are still extremely unclear
whether this is a viable solution … [It was] approved in
the 1950’s mainly as anti-malaria treatments. Since then, the
drugs have been used for a wide spectrum of diseases,
including systemic lupus erythematous (commonly known as “lupus”), rheumatoid
arthritis, Sjogren’s Syndrome, and even for complications of Lyme disease …. because
they have been around for so long, generic
versions are available, which may prove to be cost-effective if used
for coronavirus treatment worldwide.
My cmt: I would think Forbes is a reliable source. However,
so far, the stats don’t show a miracle cure yet. French deaths to French total
cases were 3.9% as of Sunday. World-wide deaths to total cases were 4.5%. So,
French fatalities were reduced about 15% below the world-wide fatalities
{(1-(3.9/4.5)}. Of course, we don’t know how many of those cases received the
dual drug protocol so we can’t conclude much.
WHAT IS AZITHROMYCIN (drugs.com)
“Azithromycin is an antibiotic that
fights bacteria. Azithromycin is used to treat many different types of
infections caused by bacteria, such as respiratory infections, skin
infections, ear
infections, eye infections, and sexually
transmitted diseases.” Story at…
CORONAVIRUS (NTSMblog)
There are currently 41,708 coronavirus cases in the
United States, an increase of 9,627 from yesterday. There is no point in
projecting the number of cases in 30-days – it’s basically the US population. At
the current growth rate, the US will surpass half-million cases in 7-days. If
20% of cases go into ICU, it will fill every ICU bed currently available. 9
days ago there were about 1000 new cases; today, there were about 10,000 new
cases.
PAUL SCHATZ MARKET COMMENTARY (Heritage Capital)
“I suspect that after the market gets through the middle
of next week, we will see volatility begin to abate and stocks begin to find
their footing. I don’t imagine that investors will be lining up to buy heading
into a weekend. And Mondays have not been kind to the bulls over the past
month. There may be one selling wave left. However, if you can close your eyes,
swallow hard and wait until Wednesday, I think stocks may be closer to calming
with a green shoot sprouting here or there.” – Paul Schatz, President Heritage
Capital. Commentary at…
WEEKLY INVESTMENT STRATEGY (Raymond James)
“…there is a ‘light at the end of tunnel’ as our Health
Care Analyst Chris Meekins estimates a 70% probability that we will “turn the
corner” by Memorial Day. If this occurs, there is potential for a robust
economic rebound in the second half of the year as US consumers return to
stores (possibly with government cash in hand) and as businesses begin to
rehire their employees.” – Larry Adam, CIO, Raymond James. Commentary at…
MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell about 2.9% to 2237.
-VIX dropped about 7% to 61.59
-The yield on the 10-year
Treasury slipped to 0.788.
Volumes at the low on Friday were extremely high. One would need to go back to the Financial
Crisis to find volumes as high; however, volumes were lower Friday than at the
March 2009 low. It is beginning to look like the market may be finding that
short-term bottom I wrote about a week ago.
-Money Trend is turning bullish.
-One of my indicators that tracks New-High/New-Low data is
very nearly bullish.
-MACD of the percentage of stocks advancing on the NYSE
(breadth) made a bearish crossover 21 Feb. Now, it is flattening and is looking
more bullish, although it is not bullish yet.
-The Fosback New-hi/New-low Logic Indicator turned
bullish.
-Unchanged-volume was high today and some think that can
indicate a possible change in direction. (I never found a very good correlation,
but sometimes it’s right.)
We didn’t break out of the waterfall drop as we had hoped
last Tuesday and the markets continued down. As we wrote then, these selling
stampedes tend to last 17-25 sessions. Today was #23 so perhaps tomorrow will
be Turning-Tuesday when the market participants decide to move back into the
market. If so, it would mark the beginning of a significant bounce that, on
average, retraces 50% of the loss.
These bounces usually fail and are followed by a retest of
the lows. Timing of that retest varies;
However, from the bottom of the waterfall drop until a retest was about
100-days for both the dot.com and Financial Crises. Unfortunately, we must also
note that the time from top to bottom during the Financial crisis was more than
200-days.
If the retest is a lower-low, i.e., the S&P 500 drops
below the first major low before a bounce, we have tools to decide whether it
is a good buying opportunity. If the retest
is a higher low, it is much more difficult to make buy call. We’ll see.
In the past 15 years or so, corrections greater than 10%
have lasted 68 days top to bottom. We’re
at day 23 in the correction and the S&P 500 is now 33.9% below its all-time
top, on 19 Feb.
Overall, the daily sum of 20 Indicators improved
from -8 to -2 (a positive number is bullish; negatives are bearish). The 10-day
smoothed sum that negates the daily fluctuations improved from -91 to -83.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
We made a new low today; we’ll have to keep waiting for
that bounce. I don’t think we have bottomed yet, but it is possible that we
might not be far away. Sometimes, the bottom of the waterfall decline is also
THE low. The trouble is we don’t have all the information to decide. We
obviously are facing a possible recession and that presents even more unknowns.
Time wise, it could be months before I’ll be able to make
a call.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: +6**
Most Recent Day with a value other than Zero: +6 on 23 March.
(The S&P 500 Index is too far below the 200-dMA when sentiment is included;
Non-Crash Sentiment is bullish; Breadth has made a bullish divergence from the
S&P 500; Money Trend has turned bullish; the Fosback New-hi/new-low Logic
Indicator is bullish; and Smart Money {late-day-action} is oversold.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher is a Buy
Sign.
**The Top/Bottom indicator continues to give
extreme oversold readings, but as I have been saying, we won’t know when we
have a bottom until we have a successful retest, or a reversal buy-signal from
Breadth or Volume.
MOMENTUM ANALYSIS:
CAUTION: Momentum is not a good tool during market
declines.
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
The top ranked ETF receives 100%; in this case, -100%
because the market has been so bad. The rest are then ranked based on their
momentum relative to the leading ETF.
While momentum isn’t stock performance per se, momentum is closely
related to stock performance. For example, over the 4-months from Oct thru
mid-February 2016, the number 1 ranked Financials (XLF) outperformed the
S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked in the top 3
Momentum Plays for 52% of all trading days in 2017 (if I counted correctly.)
XLK was up 35% on the year while the S&P 500 was up 18%.
*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…
MONDAY 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 40% invested in
stocks as of 3 March. (I previously dropped stock allocations to 45% on 27
January). You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Monday, the PRICE & NON-CRASH SENTIMENT indicators
are bullish; the VOLUME & VIX indicators gave bear signals. The Long-Term Indicator remained
to HOLD. The important sell signal was 24 February and I sold before
that due to other signals.
