“Bottom fishing is still the most expensive sport in the
world.” Scott Minerd, Guggenheim Global Chief Investment Officer.
HEROES IN THE HOSPITALS
My daughter called to check up on me. She is an ER nurse
in Richmond, VA. Yesterday, they sent 6 coronavirus victims out in body bags
and none were counted in the corona statistics. The hospital doesn't have
enough test kits. Last week they
sent a half-dozen home with the virus because they weren't bad enough to be
admitted; they weren't counted either. No test kits.
She says the virus is much more prevalent than is
currently understood.
The WSJ reported on the cruise ship where all passengers
and crew were tested before disembarking. Of the 635 positive test
results, half had no symptoms.
The lesson: Assume everyone has it; follow the guidelines
for hand-washing, distancing, etc.
CORONAVIRUS (NTSMblog)
There are currently 51,542 coronavirus cases in the
United States, an increase of 9,832 from yesterday. Yesterday, there were 9,627
new cases so the rate of increase may be slowing. This positive sign may be
coming from questionable data, since it is extremely volatile. I think a lot of the volatility comes from when
the data is reported. As a result, the projections bounce around. At the
current growth rate (a 5-day average), the US will surpass 350,000 cases in
7-days and 200-million in 30-days. This is my mathematical projection based on
growth rate and has nothing to do with medical realities. It is
not likely that the number of cases will ever reach 200-million; as more people
get the virus, the growth rate would drop.
My analysis does not account for that.
TRUMP WANTS TO EASE RESTRICTIONS (Business Insider)
“President Donald Trump said on Tuesday that he wanted to
have the US "opened up and just raring to go by Easter" — on April
12, in 19 days. That would go against the advice of top public-health experts,
like Dr. Anthony Fauci, who are concerned that ending social-distancing
measures too soon could exacerbate the coronavirus outbreak. "I cannot see
that all of a sudden, next week or two weeks from now, it's going to be
over," Fauci said on Friday. "I don't think there's a chance of
that." Story at…
My cmt: The only people happy about this are the “never-Trumpers,”
because Trump could lose the election over this sort of decision if he
were to go against his medical team. He could even be impeached for real if
enough Grandmas die.
FED EMERGENCY ACTION (CNN Business)
“The Federal Reserve is signaling it will do whatever it
takes to save the coronavirus-ravaged American economy from a depression. The
US central bank massively accelerated its rescue plans Monday by announcing
unlimited bond-buying, three new credit facilities and an upcoming Main Street
lending program. Taken together, the Fed said the new programs will provide up
to $300 billion in new financing to an economy getting crushed by the crippling health
restrictions aimed at fighting the pandemic. The Fed is going all out to prevent
the health crisis from turning into a full-blown financial crisis.” Story at…
NEW HOME SALES (Reuters)
“Sales of new U.S. single-family homes fell in February
after surging in the prior month, and could decline further because of the
coronavirus pandemic which is boosting unemployment and severely disrupting
economic activity. The Commerce Department said on Tuesday new home sales
dropped 4.4% to a seasonally adjusted annual rate of 765,000 units last month.”
Story at…
RICHMOND FED MANUFACTURING (Richmond FED)
“Fifth District manufacturing activity remained fairly
flat in March, according to the most recent survey from the Federal Reserve
Bank of Richmond. The composite index remained close to 0, rising from −2 in
February to 2 in March. The indexes for shipments and new orders were above
their February values, but the third component — employment — decreased.” Press
release at…
HUSSMAN COMMENTARY EXCERPT (Hussman Funds)
“I continue to expect the S&P 500 to lose about
two-thirds of its value from its recent high to the trough of the next bear
market. As I’ve regularly observed, a decline of that magnitude would not be
a worst-case scenario. Rather, it would merely draw S&P 500 valuations
to historically run-of-the-mill valuation norms that have been observed over
the completion of nearly every market cycle in history, with the exception of
the 2002 low (which was later breached in 2009). Based on the valuation
measures we find best-correlated with actual subsequent market returns across
history, even a retreat to October 2002 valuations would require a market loss
of over -50% from the recent peak.
To put run-of-the-mill historical valuation norms into
perspective, a two-thirds loss in the S&P 500 Index from its February 19
high of 3386 would place the index at roughly 1129, still about -62% below
where the index closed at the end of last week.” – John Hussman, Ph.D., 1 Mar
2020.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 jumped about 9.4% to 2447.
-VIX rose about 0.1% to 61.67
-The yield on the 10-year
Treasury rose to 0.848.
During the stock market crash in 2008, the Fed changed
the rules for valuing bank assets, effectively and instantly increasing Bank
reserves. That signaled a bottom and markets moved higher. Will the emergency-measures
the FED has taken recently, send the stock market back to old highs? Frankly, I
don’t know. Judging from the various opinions on CNBC, the talking heads can’t
agree either.
We suggested that, based on improving signals, today
might be a “turning-Tuesday”. Wow, was it ever and we got another bull-sign.
Today was a 90% up-volume-day that was a reversal of several
prior 90% down-volume days. This is a very bullish sign. I hesitate to call a
buy on this indicator, because we saw a number of these reversal-days from October
2008 until the eventual bottom in March of 2009 as the market fell another 25%.
After the bottom on 9 March, there were four, 90% up-volume days over the
following 3-weeks, so I’ll wait for more confirmation.
There were other bullish signs too, as I noted yesterday,
so I won’t repeat them.
The S&P 500 retraced 18% of its decline today. 50% is
about the max we might expect.
In the past 15 years or so, corrections greater than 10%
have lasted 68 days top to bottom. We’re
at day 24 in the correction and the S&P 500 is now 27.7% below its all-time
top, on 19 Feb. The 2008-2009 Financial crisis lasted 1.4 years from top to
bottom. In 2000, it was 2 years from top to bottom. Let’s hope that we don’t
repeat the declines of the dot.com and Financial crises. It’s possible though, one can review the
regression to trend chart and discussion in my earlier blog at…
Overall, the daily sum of 20 Indicators improved
from -3 to -1 (a positive number is bullish; negatives are bearish). The 10-day
smoothed sum that negates the daily fluctuations improved from -85 to -76.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
Hopefully, yesterday was the bottom of the waterfall
decline. 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. While China’s stock
market has made some recovery, it is not clear that their economy has returned.
The questions remain: Is this the start of a disastrous
decline that will include another 20-30% drop?...or…is this a quick decline
that will be cured along with the COVID19? I don’t know, but maybe we’ll get
some more clues sooner rather than later.
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 24
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…
I own SSO as a trading position and I still own Intel as my "reentry" stock. I
plan to hold Intel.
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.
