“Bottom fishing is still the most expensive sport in the
world.” Scott Minerd, Guggenheim Global Chief Investment Officer.
JOLTS-FEB 2020 (Bureau of Labor Statistics)
“The number of job openings was little changed at 6.9
million on the last business day of February, the U.S. Bureau of Labor Statistics reported today. Over the
month, hires and separations were little changed at 5.9 million and 5.6 million, respectively.
Within separations, the quits rate was unchanged at 2.3 percent and the layoffs and discharges rate was
little changed at 1.2 percent.” Report at…
PAYROLL REPORT – 4 DAYS AGO (Advisor Perspectives)
We knew it was bad when we heard the numbers. The chart is still a shock.
Chart from…
FROM THE PHILADLPHIA FED:
Chart from the Philadelphia FED at…
My cmt: Ruh-roh! Can you say recession? The big question
is, “How soon will it bounce back?”
CHANCES FOR A “V” RECOVERY DIMINISH EACH DAY (MSN.com)
"The longer this lasts, the greater structural
damage it will do to the economy and the weaker the recovery will be,"
said Gus Faucher, chief economist at PNC Financial. "It's going to be
small business. They have the fewest resources to fall back on. Many of them
are already operating at the margin. They're the most vulnerable." Story
at…
LIFTING CORONAVIRUS LOCKDOWNS (ZeroHedge)
Chart and Story at…
Repeating a comment from yesterday: Bill Gates has predicted
that it would be safe to return to work on 1 June and I am assuming he is
consulting with experts. The Governor of NJ said we can open-up “deep into May”
at the earliest.
CORONAVIRUS (NTSM)
Some good news: As we suspected, and as confirmed by the
final numbers last night, Monday (yesterday) was the first day that new cases in
the US declined from the previous day.
Total cases are still going up, but with new-cases declining, it means
that the curve IS flattening. There were 36,000 new-cases Sunday and
only 30,000 new-cases Monday. The total number of cases still climbed from
338,000 to 368,000 cases between Sunday and Monday.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dropped about 0.3% to 2659.
-VIX rose about 3% to 46.7.
-The yield on the 10-year
Treasury rose to 0.715.
Today’s bounce carried the S&P 500 to an intra-day
level of 2757. That’s close to the 50% retracement level (2810) that is the
average for this type of rally. There were Pros estimating a top of 2750. The
Index certainly met resistance there and fell all afternoon. The
market action today was not bullish; the Index failed to maintain yesterday’s
momentum. So, tomorrow will be
interesting. Can it regain its mojo or are we headed back down? Stay tuned.
The Index is currently down 17% from its all-time high. Today
is day 34 of the correction. Corrections greater than 10% last (on average) 68
days. Crashes are significantly longer; I am not sure if this is a crash
yet. It certainly has the potential to
be one.
Overall, the daily sum of 20 Indicators improved
from +7 to +8 (a positive number is bullish; negatives are bearish). The 10-day
smoothed sum that negates the daily fluctuations improved from +39 to +48.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
Based on history a retest of the low is the most likely
outcome. I will wait for a successful retest or other significant
bullish signs before adding further to stock holdings.
RECENT STOCK PURCHASES
-SSO. SOLD
-Biotech ETF (IBB). #1 in momentum. We’re in a health
crisis so perhaps this will be a good longer-term hold too.
-Apple. SOLD
-XLK. Technology ETF spreads some risk and gives exposure
to Microsoft, Cisco, etc.; was #1 in momentum before the crisis.
-Starbucks. SOLD
I took small losses on the stock trades.
TOP / BOTTOM INDICATOR SCALE OF 1 TO 10 (Zero is a
neutral reading.)
Today’s Reading: +5**
Most Recent Day with a value other than Zero: +5 on 7 April.
(Non-Crash Sentiment is bullish; Breadth has made a bullish divergence from the
S&P 500; Money Trend is bullish; the Fosback New-hi/new-low Logic Indicator
is bullish; and the 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:
IBB has the highest negative momentum; IBB (iShares Nasdaq Biotechnology ETF) is the best of the bad. IBB is down “only” 8% in the last 40-days.
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. 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. The highest ranked are those closest to
zero.
United Technologies is now Raytheon Technologies, ticker symbol
RTX. I’ll need to do some work to bring
this up to date. For now, ignore RTX in
the momentum analysis.
For more details, see NTSM Page at…
TUESDAY 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 35% invested in
stocks. You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance.
INTERMEDIATE / LONG-TERM INDICATOR
Tuesday, the VOLUME, PRICE and NON-CRASH SENTIMENT
indicators are bullish; the VIX indicator is still giving a bear signal.
The Long-Term Indicator remained HOLD. I sold some stocks
1 April. If we do retrace down, I’ll try to find a good buy-point. At that time, I’ll increase stock holdings
significantly.
