"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
NEW HOME SALES (MarketWatch)
“Sales of newly-built single-family houses occurred at a
seasonally-adjusted annual rate of 676,000 in May, the government reported Tuesday. That represented a 16.6%
increase from the downwardly-revised pace of 580,000 in April. Compared with
the previous year, new home sales were up 12.7% in May.” Story at…
CHICAGO FED NATIONAL ACTIVITY INDEX (Chicago Fed)
“Led by improvements in production- and
employment-related indicators, the Chicago Fed National Activity Index (CFNAI)
rose to +2.61 in May from –17.89 in April. All four broad categories of
indicators used to construct the index made positive contributions in May, and
all four categories increased from April. The index’s three-month moving
average, CFNAI-MA3, moved up to –6.65 in May from –7.50 in April. On June 8,
2020, the National Bureau of Economic Research determined that the U.S. economy
had reached a business cycle peak in February 2020. The CFNAI-MA3 first pointed
to an increasing likelihood that a recession had begun in March 2020, as
initially reported in the April 20, 2020, CFNAI release.” Press release
available at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:15 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 re-accelerated. Over the last week, new cases have been growing as fast as they
were in April. There have been 27,000 new cases (so far) today.
-Tuesday the S&P 500 rose about 0.4% to 3131.
-VIX fell about 1% to 31.37.
-The yield on the 10-year Treasury rose slightly to 0.719%.
We continue to see MACD of Breadth on the NYSE and MACD
of S&P 500 price give bearish signals. Volume on the NYSE was still low,
about 20% below the monthly average today. Money Trend is bearish. The Smart
Money (based on late-day-action) is bearish but not drastically so.
The daily sum of 20 Indicators remained -3 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that negates the daily fluctuations declined from -4 to -16 (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 remained Neutral. 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…
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained
to 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. 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.
