"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)
“The number of Americans who filed for unemployment
benefits rose more than expected last week as the country continues to grapple
with the economic impacts of the coronavirus pandemic. Initial weekly
jobless claims came in at 1.3 million for the week ending July 11…” Story at…
RETAIL SALES (Reuters)
“U.S. retail sales rose more than expected in June as
consumers bought big-ticket items like motor vehicles and dined out, but a
resurgence in new COVID-19 cases is chipping at the budding recovery, keeping
32 million Americans on unemployment benefits… Retail sales rose 7.5% last
month…” Story at… https://www.reuters.com/article/us-usa-economy/us-retail-sales-snap-back-high-unemployment-rising-covid-19-loom-over-recovery-idUSKCN24H1ZD
PHILADELPHIA FED INDEX (MarketWatch)
“The Philadelphia Federal Reserve's manufacturing index
pulled back to 24.1 in July after registering a reading of
27.5 in June.” Story at…
COVID IMMUNITY LOST WITHIN MONTHS (The Guardian)
“People who have recovered from Covid-19 may lose their
immunity to the disease within months, according to research suggesting the
virus could reinfect people year after year, like common colds…The study has
implications for the development of a vaccine, and for the pursuit of “herd
immunity” in the community over time.” Story at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:10 PM Thursday. There were about 71,400 new cases today (a new record
high). 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 was down about 0.3% to 3216.
-VIX fell about 0.4% to 27.65. (Yesterday’s
value was a typo.)
-The yield on the 10-year Treasury dipped to 0.619%.
Information Technology was the weakest performer today (-1.2%)
while Industrials were up 0.1%. Materials were up 0.5% while the big winner for
the day was Utilities at +1.5%. This is either normal rotation or a warning sign,
if the leaders of the rally (technology stocks) continue to slip.
I have very few negative indicators. We’ll see.
The daily sum of 20 Indicators declined from +6 to
+5 (a positive number is bullish; negatives are bearish). The 10-day smoothed
sum that smooths the daily fluctuations improved from +15 to +24. (These
numbers sometimes change after I post the blog based on data that comes in
late.) Most of these indicators are short-term.
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 declined
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.
