"This imaginary person out there - Mr. Market - he's
kind of a drunken psycho. Some days he gets very enthused, some days he gets
very depressed. And when he gets really enthused, you sell to him and if he
gets depressed you buy from him. There's no moral taint attached to that."
- Warren
Buffett
“The big money is not in the buying and selling. But in the
waiting.” - Charlie Munger, Vice Chairman, Berkshire Hathaway
EIA CRUDE INVENTORIES (OilPrice.com)
“The Energy Information Administration reported a
1.4-million-barrel increase in crude oil inventories for the week to June 19.”
Story at…
TECHNICALLY SPEAKING EXCERPT (RIA)
“With sentiment currently at very high levels, combined
with low volatility, and a high degree of investor complacency, all the
ingredients necessary for a market reversal are currently present. Am I
sounding an “alarm bell” and calling for a massive correction? No.
I am suggesting that remaining heavily invested in the
financial markets without a thorough understanding of your “risk
exposure” will not have the desirable end result you have been promised.
As stated above, my job is to participate in the markets
while keeping a measured approach to capital preservation. Since it
is “bearish” to point out potential “risks,” then you can
call me a “bear.”
Just make sure you understand that I am currently
a “fully-invested bear.” However, that positioning can, and will, rapidly change
as needed.” Full commentary at…
PAUL SCHATZ COMMENTARY EXCERPT (Heritage Capital)
“…stock market sentiment among newsletter writers from
the Investors Intelligence service [shows that] the bulls are soaring and the
bears are falling. That’s not usually the recipe for extended short-term
gains.” Commentary at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:00 PM. While the curve did flatten, showing slowed growth in April thru
the first week in May, the curve is now climbing faster, because the growth of
new-cases has accelerated. Forget flattening. Over the last week, new cases have been growing as
fast as they were in April. There have been 37,000 new cases (so far) today.
The news media is all about “record numbers of cases.” That’s not the issue – higher totals happen
every day as new cases are added. What
is critical, is the number of new cases and how is it growing. In a word
– it’s bad. Trump says he won’t shut the country down again. Ok, but a resurgence in illness will slow the
economy and extend the slow death for restaurants, airlines, theme parks,
movies, cruise lines, energy, materials, etc. all while slowing retail sales.
-Wednesday the S&P 500 fell about 2.4% to 3131.
-VIX rose about 10% to 34.64.
-The yield on the 10-year Treasury dipped to 0.684%.
Today, 90% of the volume was to the downside, but there
was not enough weakness into the close, so it did not meet the Lowry Research
test for a bearish 90% down-volume day. If it had, we could have concluded that
the trend was definitely down based on this indicator. We still have others that are suggesting a
down-trend. We continue to see MACD of Breadth on the NYSE and MACD of S&P
500 price giving bearish signals. Money Trend is bearish. The Smart Money
(based on late-day-action) is bearish. Both long-term and short-term measures
of new-high/new-low data turned down today.
This is usually slow too turn, so it may be a reliable suggestion that
the trend has reversed.
The S&P 500 did manage to close about 1% above its
200-dMA and that’s a small bullish victory; but the Index did break the lower
trend-line in the upwardly trending channel. We’ll have to see if it closes
below it tomorrow; that would be bearish.
The daily sum of 20 Indicators declined -3 to -14
(a positive number is bullish; negatives are bearish). The 10-day smoothed sum
that negates the daily fluctuations declined from -16 to -37 (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
My Long-term indicator remained HOLD today; the
Short-Term Indicator declined to Bearish. Since Indicators are not yet giving a
short-term Buy-signal, I am still under-invested. I’ll increase stock holdings if we see some
additional improvement in signals, especially the MACD & Money Trend
indicators.
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.
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals fell
to NEGATIVE 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. 40% is a conservative position that I re-evaluate
daily.
As a retiree, 50% in the stock market is about fully
invested for me – it is a cautious and conservative number. If I feel very
confident, I might go to 60%; had we seen a successful retest of the bottom,
80% would not have been out of the question.
