JOBLESS CLAIMS (MarketWatch)
“Some 3.8 million American workers who just lost their
jobs applied last week for unemployment benefits, bringing a record number of
layoffs during the coronavirus crisis to about 30 million in a month and a
half.” Story at…
PERSONAL SPENDING / PCE PRICES (Bloomberg)
“U.S. personal spending plummeted in March by the most on
record as widespread shutdowns and job losses from the Covid-19 pandemic
wreaked havoc on the economy’s main engine -- consumers…. The broader personal
consumption expenditures price gauge, which the Fed officially targets for 2% inflation,
rose 1.3% from a year earlier.” Story at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:30 PM. Nationwide, there were about 32,000 new-cases today, about 8,000
more than yesterday. The 5-day growth-rate was 0.97, i.e., average new cases
are falling at a rate of 3% per day. It’s headed in the right direction for a
change.
These numbers are based on U.S. totals; local data will
be different.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dipped about 0.9% to 2912.
-VIX rose about 9% to 34.15.
-The yield on the 10-year Treasury rose to 0.644.
Based on past history, a “V” bottom is rare. For a huge drop like the 34% decline we
recently experienced, a “V,” flash-crash, down-and-back seems impossible
especially given the economic backdrop.
It may be, but my long-term indicator flashed BUY 4 days ago and I need
to respect that signal. At present, I
have not been trading what I see; I have been trading what I think. I think the market should fall back and
retest the lows. But what I see is a
collection of indicators that are very bullish.
Even the Breadth MACD that looked like it might turn bearish, now looks
OK. So, I am bumping my stock allocation higher.
I bought Microsoft today to get stock holdings to 45%. It’s
#1 in my momentum analysis and they reported great earnings. Covid-19 didn’t hurt their business.
The S&P 500 closed on its lower trend line today. We’ll
need to see if it drops lower as that would be an obvious bear-sign that perhaps
the rally was ending. The Index is currently 3.1% below its 200-dMA. Resistance
points are shown below.
We could still be at a top, regardless of what the
indicators say, but I plan to increase my stock allocation. I’ll
try and post before I do.
RESISTANCE:
61.8% Fibonacci Retracement: 2950
200-dMA: about 3025
Resolution of Bearish Ascending Wedge: About 3200
The Prior all-time High: 3386
Wednesday’s closing S&P 500 level of 2940 represented
a retracement of 61% from the prior low back toward the all-time high. 57%
retracement (2890) is the average for this type of rally; 52% is the median.
The rally has lasted 26 days; the average length of a counter-trend rally after
a 15% waterfall decline is 21 days. The
median is 11 days.
The Index is currently down 14% from its all-time high.
Today is day 50 of the correction. Corrections greater than 10% last (on
average) 68 days, top to bottom. Crashes are significantly longer; I am not
sure if this is a crash yet. I’ll be surprised if this is over in 3-weeks.
Overall, the daily sum of 20 Indicators dipped
from +13 to +10 (a positive number is bullish; negatives are bearish). The 10-day
smoothed sum that negates the daily fluctuations improved from +52 to +56.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
I think we go higher. Most indicators remain bullish.
RECENT STOCK PURCHASES
Of purchases near the recent low, I still own:
-Biotech ETF (IBB). #1 in momentum. We’re in a health
crisis so perhaps this will be a good longer-term hold too. Gilead is the
largest holding in the IBB-ETF.
-XLK. Technology ETF spreads some risk and gives exposure
to Microsoft, Cisco, etc.; was #1 in momentum in the ETFs I track before the
crisis.
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 30
April. (Non-Crash Sentiment is bullish; Breadth is diverging from the
S&P 500 in a bullish direction; New-hi/new-low data is bullish; and Smart
Money is overbought, so it is -1.)
(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
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:
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
The top ranked ETF receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF. The highest ranked are those closest to zero.
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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
BULLISH 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. You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Thursday, the VOLUME, SENTIMENT & PRICE indicators
are bullish; VIX was bearish.
The 5-10-20 Timer System remained bullish, because the
5-dEMA and the 10-dEMA climbed above the 20-dEMA. This is a good indicator on
its own.
The
long-term indicator dipped to HOLD.
