They should have shown the image to my Border Collie!
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
FED EMERGENCEY RATE CUT (MarketWatch)
“The Federal Reserve, in a rare inter-meeting move, on
Tuesday cut its benchmark interest rate to counter the threat to the economy
from the coronavirus epidemic. In a statement, the Fed said it cut its fed funds target
rate by a half percentage point to a range of 1%-1.25%.” Story at…
CRAMER MORE WORRIED AFTER RATE CUT (MarketWatch)
“It’s great that the Federal Reserve recognizes that
there’s going to be weakness, but it makes me feel, wow, the weakness must be
much more than I thought,” Cramer said, adding that the rate cut doesn’t
exactly ease coronavirus fears.” Story at…
My cmt: My sentiments exactly. I sold the rest of my
Apple position when Powell announced the rate cut.
AUTO SALES (Nasdaq.com)
“Customers streamed into auto showrooms from California
to Florida over the weekend, car dealers across the United States said on
Monday, shrugging off concerns that coronavirus worries might dampen sales.”
Story at…
REGRESSION TO TREND – LONG TERM MARKET PERFORMANCE
(Advisor Perspectives)
Chart from…
My cmt: 3 standard deviations above trend has not been
seen since the dot.com crash…and now the coronavirus.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dropped about 2.8% to 3003.
-VIX rose about 10% to 36.82.
-The yield on the 10-year Treasury slipped to 1.003.
My current expectation is that the markets will retest
the recent low of 2954 on the S&P 500. At that time, we’ll have a lot
more information about the market and should be able to make an informed
decision whether to get back in or stay out. That is probably more than a month
away.
The “average” correction has been 12% since 2009. In the
past 15 years or so, corrections greater than 10% have lasted 68 days top to
bottom.
We’re at day 9 and the S&P 500 is now 11.3% from
its all-time top, on 19 Feb. It is 3.6% below its 200-dMA.
Overall, the daily sum of my 20 Indicators improved
from -10 to -9 (a positive number is bullish; negatives are bearish). The
10-day smoothed sum that negates the daily fluctuations declined from -96
to -105. (These numbers sometimes change after I post the blog based on data
that comes in late.) Most of these indicators are short-term.
I sold the rest of my Apple position today shortly after
the Fed announcement. It is not reassuring to me that the Fed panicked.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: +2
Most Recent Day with a value other than Zero: +2 on 3
March. (RSI was bullish and the Smart Money (late-day-action) is oversold,
another bullish sign.)
(1) +10 Max Bullish / -10 Max Bearish)
(2) -4 or below is a Sell sign. +4 or higher is a Buy
Sign.
MOMENTUM ANALYSIS:
CAUTION: Momentum is not a good tool during market
declines.
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…
TUESDAY 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, down from 60%). My current stock allocation is a conservative position
appropriate for a retiree based on the bounce we saw in the ongoing correction
and prior market bear signals. You may wish to have a higher or lower %
invested in stocks depending on your risk tolerance.
It is probably too late to sell stocks now.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the VOLUME and VIX gave bear signals; The
SENTIMENT and PRICE Indicators were neutral. The Long-Term Indicator remained
SELL.
