“The big money is not in the buying and selling. But in the
waiting.” - Charlie Munger, Vice Chairman, Berkshire Hathaway
RETAIL SALES (Reuters)
“U.S. retail sales increased by the most on record in May
after two straight months of sharp declines as businesses reopened, offering
more evidence that the recession triggered by the COVID-19 pandemic was over or
drawing to an end…Retail sales jumped 17.7% last month, the biggest advance
since the government started tracking the series in 1992.” Story at…
INDUSTRIAL PRODUCTION (MarketWatch)
“Manufacturing output, which had dropped sharply in March
and April, increased 3.8% in May, the Fed said. Most major industries saw gains, with the
biggest rise posted by motor vehicles and parts. Even so, total industrial
production last month was 15.4% below its pre-pandemic level…” Story at…
POWELL SEMIANNUAL MONETARY TESTIMONY (MarketWatch)
“Powell reiterated that the road to recovery from the
pandemic likely would be a long one and cautioned investors that they shouldn’t
overreact to surprisingly good economic data like the May retail
sales report published Tuesday because the levels of output and
employment remain far below their pre-pandemic levels.” Story at…
BEWARE OF ZOMBIE MARKETS (CNBC)
“Allianz Chief Economic Advisor Mohamed El-Erian said
he’s not just worried about “zombie” companies but about “zombie markets,”
too…“We’re not there yet, but we’re starting to get close.”…“Zombie markets are
markets that are completely mispriced, they’re completely distorted,” El-Erian
said. “Why? Because there is a policy view that you need to subsidize
everything in markets for now.” Story at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:30 PM. While the curve has flattened, indicating slowed growth in April
thru the first week in May, we can see that the curve is only slightly
diverging from the dashed line since 9 May, an indication that the growth rate
is little changed over the last month. There have been 23,000 new cases (so far)
today.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1.9% to 3125.
-VIX fell about 0.7% to 33.71.
-The yield on the 10-year Treasury rose to 0.757%.
The S&P 500 dipped below its 200-dMA last week, but
it bounced above it Friday and has stayed higher this week. The chart is giving
a bullish sign. Indicators don’t entirely
agree. MACD of Breadth and MACD of
S&P 500 price are both bearish. My Breadth vs the S&P 500 divergence
indicator is bearish as is the Money Trend. Unfortunately, Mr. Market doesn’t
pay attention to my indicators. In this case the chart may prevail.
The daily sum of 20 Indicators improved from -2 to
+5 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that negates the daily fluctuations declined from +54 to +50. (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 improved to Buy today; the
Short-Term Indicator remains Hold. 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 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.
