“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
"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
UNIV OF MICHIGAN SENTIMENT (MorningStar.com)
“Americans' view of the economy improved in early June as
the country continued to reopen while trying to contain the coronavirus
pandemic, according to a University of Michigan survey released Friday. The
survey's index of consumer sentiment rose to 78.9 in the two weeks ended June
10, from 72.3 for the previous four weeks.” Story at…
BULLISH ON EQUITIES (Seeking Alpha)
“There have been two other instances since 1952 where the
S&P 500 index rallied over 30% in a period of 50 days. Interestingly, these
strong surges were followed by even higher moves for the S&P 500 index in
the one-month, three-months and six-months periods. According to the study:
"Those two short-term massive spikes turned out to be the first inning of
multi-year bull markets."… At this point, the very likely scenario is that
we will see a market pullback. However, such a pullback is likely to be met by
those who missed the rally and wish to buy and hold for the long term. There's
a massive amount of liquidity out there which will continue to push the market
higher, and it's likely that investors are now looking to go toward all-time
highs." Story at...
UC BERKELY HISTORY PROFESSOR OPEN LETTER AGAINST BLM,
POLICE BRUTALITY AND CULTURAL ORTHODOXY (Excerpt) (ZeroHedge)
“…The claim that the difficulties that the black community
faces are entirely causally explained by exogenous factors in the form of white
systemic racism, white supremacy, and other forms of white discrimination
remains a
problematic hypothesis that should be vigorously challenged by historians…
…As an example…consider the proportion of black
incarcerated Americans. This proportion is often used to characterize the
criminal justice system as anti-black. However, if we use the precise same
methodology, we would have to conclude that the criminal justice system is even
more anti-male than it is anti-black. Would we characterize criminal justice
as a systemically misandrist conspiracy against innocent American
men? I hope you see that this type of reasoning is flawed, and requires a
significant suspension of our rational faculties. Black people are not
incarcerated at higher rates than their involvement in violent crime would
predict. This fact has been demonstrated multiple times across multiple
jurisdictions in multiple countries…
…If we claim that the criminal justice system is
white-supremacist, why is it that Asian Americans, Indian Americans, and
Nigerian Americans [also black] are incarcerated at vastly lower rates than
white Americans? This is a funny sort of white supremacy…
…As a final point, our university and department has made
multiple statements celebrating and eulogizing George Floyd. Floyd was a multiple felon
who once held a pregnant black woman at gunpoint. He broke
into her home with a gang of men and pointed a gun at her pregnant stomach. He
terrorized the women in his community. He sired and abandoned multiple children,
playing no part in their support or upbringing, failing one of the most basic
tests of decency for a human being. He was a drug-addict and sometime drug-dealer, a swindler
who preyed upon his honest and hard-working neighbors…I condemn
the manner of George Floyd's death and join you in calling for greater police
accountability and police reform. However, I will not pretend that George Floyd was
anything other than a violent misogynist, a brutal man who met a predictably
brutal end.” Full Open Letter from a Black History Professor
at…
My cmt: Perhaps we’ll here from other sources to confirm
the authenticity of this letter. Even if
it is fake, it makes honest points.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:45 PM. There were 19,000 new cases about 8,000 less than yesterday. (I
think these numbers vary depending on when I get them.) 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.
Repeating:
TWO COVID POSITIVE HAIRSTYLISTS SAW 140 CLIENTS – THERE
WERE NO TRANSMISSIONS (CNN)
“No cases of coronavirus have been linked to two Missouri
hairstylists who saw 140 clients last month while symptomatic, county health
officials said. Both stylists worked at the same Great Clips location in Springfield.
The clients and the stylists all wore face coverings…” Story at…
My cmt: The new normal may be a more “open” than
anticipated, as long as everyone wears masks.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.3% to 3041. (Most of
the move was late in the day.)
-VIX fell about 12% to 36.09.
-The yield on the 10-year Treasury rose to 0.704%.
So, I sold XLI today. I am feeling like an amateur
getting in then getting out and taking a loss. Buyer’s remorse; then seller’s
remorse? Not really. As a retiree, I am
very conservative. I feel better with
less invested right now. We’ll see if a downturn develops. Perhaps the big drop yesterday cleared the
over-bullishness. My guess is probably not; we may have a bit more to go.
Time for Friday’s rundown of some important indicators:
BULL SIGNS
-MACD of stocks advancing on the NYSE (breadth) made a
bullish crossover 26 Mar.
-The 5-10-20 Timer System is BULLISH, because the 5-dEMA
and the 10-dEMA are above the 20-dEMA.
-Long-term new-high/new-low data is bullish.
-Short-term new-high/new-low data is bullish.
-The 50-dMA of stocks
advancing on the NYSE (Breadth) is above 50%.
-The Fosback High-Low Logic Index is bullish and is
giving BUY signal. This indicator also gave a BUY signal 2 days after the 23
March bottom.
-The size of up-moves has been larger than the size of
down-moves over the last month.
-The VIX indicator flopped back and forth today, but
finished in the green as VIX fell late in the day.
-The Utilities ETF (XLU) is under-performing the S&P
500 index.
-The S&P 500 remained above its 200-dMA support level,
a bullish sign.
NEUTRAL
-Non-crash Sentiment is neutral. (If the downturn deepens
and becomes more extended, I’ll switch to crash sentiment; that would take a
much lower value to issue a buy-signal.)
-Bollinger Bands and RSI are neutral.
-Over the last 20-days, the number of up-days is neutral.
The S&P 500 is neutral relative to its 200-dMA. It is
not too diverging too far above or below it.
-100-dMA of Breadth (advancing stocks on the NYSE) bounced
above 50% today, but it had been falling.
BEAR SIGNS
-MACD of S&P 500 price made a bearish crossover 10
June.
-Breadth on the NYSE vs the S&P 500 index has
drastically diverged from the S&P 500 index in a bearish manner. The Index remains way too far ahead of
breadth, at least using moving average comparisons that have usually proved to
be correct.
-Overbought/Oversold Index, a measure of advance-decline
data, is overbought.
-Statistically, the S&P 500 gave a panic-signal, 11
June. A panic signal usually suggests more to come. Had it occurred at the bottom of a decline;
this same signal would have suggested a bottom. This signal can be hard to
decipher sometimes. Now, I think it is bearish.
-Cyclical Industrials are under-performing relative to
the S&P 500.
-My Money Trend indicator is
falling.
-Yesterday, only 2% of the volume was up and the S&P
500 closed near its low for the day – a mildly bearish sign. Another 90%+
down-volume day would be very bearish if we don’t have a 90% up-volume day in
the interim.
-The last hour, Smart Money (late-day action) had been up,
but now it has turned lower. This indicator is based on the Smart Money Indicator
(a variant of the indicator developed by Don Hayes).
-The smoothed advancing volume on the NYSE has been falling
over the past 10-days.
-The percentage of 15-ETFs that are above their
respective 120-dMA was 27% Friday. That’s a low number and may suggest more
trouble ahead. (This is a new indicator and I don’t have much experience with
it.)
On Friday, 21 February, 2 days after the top of this
pullback, there were 10 bear-signs and 1 bull-sign. Now there are 10 bull-signs
and 10 bear-signs. Last week there were 15 bull-signs and 4 bear-signs.
The daily sum of 20 Indicators declined from -4 to
-6 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that negates the daily fluctuations declined from +79 to +64. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term. The down-trend is a bearish
sign.
So far, I do not have a sell signal, Short-term or
Long-Term, although the Long-term indicator deteriorated from BUY to HOLD
yesterday.
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.
*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…
FRIDAY 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’ll 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.
