"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
FOMC RATE DECISION (CNBC)
“The Federal Reserve held interest rates steady in a
decision announced Wednesday that came along with a tepid outlook on the
coronavirus-plagued economy… “Following sharp declines, economic activity and
employment have picked up somewhat in recent months but remain well below their
levels at the beginning of the year,” the statement said.” Story at…
EIA CRUDE OIL INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 10.6 million barrels from the
previous week. At 526.0 million barrels, U.S. crude oil inventories are about
17% above the five year average for this time of year.” Press release at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:45 PM Wednesday. The US had about 50,000 new cases today. The curve of
total US cases is still climbing steeply.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.2% to 3258.
-VIX dropped about 5% to 24.1.
-The yield on the 10-year Treasury slipped to 0.577%.
The markets shrugged off yesterday’s weakness, liked the
FOMC statement (because there were no surprises) and jumped higher.
The Bearish cross on MACD for S&P 500 remains while
the MACD of NYSE Breadth stayed slightly bullish. On review, I think the best
course is to follow these in tandem. A split decision (as we have now) is
neutral.
The daily sum of 20 Indicators improved from -1 to
-0 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations declined from +17 to zero.
(These numbers sometimes change after I post the blog based on data that comes
in late.) Most of these indicators are short-term.
I don’t see major divergences in the internals. Top Indicators are silent. It looks like the
markets can go higher.
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…
WEDNESDAY 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. It is not far below my fully invested position which would be between
50-60%.
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.
