"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
JOBLESS CLAIMS (CNBC)
“Weekly jobless claims were lower than expected last week
as workers slowly returned to their jobs in the wake of rising coronavirus
cases. Claims for the week ended July 4 totaled 1.314 million…” Story aat…
IT’S ALL ABOUT THE NASDAQ 100 (Heritage Capital)
“As I have written for months, the NASDAQ 100 index looks
absolutely nothing like the Dow Industrials, S&P 500, S&P 400, Russell
2000 or any other major index. It’s been in a world of its own [super bullish].
That’s okay, at least in the short-term. However, the longer this behavior
lasts, the more punishment there will be down the road, a story for another
day.” - Paul Schatz, president Heritage Capital. Commentary at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 6:10 PM Thursday. There were about 54,000 new cases today. The steepening curve is the graphic
indication that new-cases are growing at a dramatically faster rate than we
have seen at any time in the US…and they continue to accelerate.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dropped about 0.5% to 3153.
-VIX rose about 5% to 29.61.
-The yield on the 10-year Treasury dipped to 0.609%.
The Price indicator in the NTSM Long-term model remains
bearish and it is issuing a sell. Other areas the ensemble-indicator have not
agreed yet, so I don’t have a sell indication yet. As I noted yesterday, the
Price part of the long-term model is pretty good on its own. This indicator is
based on a Ratio of up to down moves (adjusted for volume) and it is warning of
a top. The last 4 times the indicator was as bearish as now (over the last 2-1/2
years), we saw pullbacks of 34%, 7%, 20% and 10%. There were no false sell
signals during the timeframe. This indicator doesn’t give many false sell
signals. The definition of a falling market is when down-moves are bigger than
up-moves. This indicator calculates a ratio and signals a condition that
otherwise might not be obvious from the charts alone.
The Breadth MACD was already bearish. MACD of Breadth now
shows a widening of the MACD and signal lines which is signaling breadth is
getting worse, not better.
XLI was down 2.2% today while the S&P 500 was down 0.6%.
Investors are selling cyclicals and the bearish spread is increasing. Investors had been buying cyclical industrials
since mid-May.
MACD of Price had a bullish cross yesterday, so nothing is ever
completely clear.
The daily sum of 20 Indicators remained +1 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from -34 to -19. (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. I had planned
to increase stock holdings on weakness, but now I am watching my long-term
indicator.
I still wonder if any of this makes any difference. Has the FED overruled all stock market
indicators? Perhaps…we’ll see.
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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to POSITIVE 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. I’m watching the Long-Term indicator that may be close to issuing
a SELL signal.
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.
