"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
PAYROLL REPORTS / UNEMPLOYMENT RATE (Finance.Yahoo.com)
“The U.S. economy regained millions more jobs in June
from May, as regions across the country eased social distancing restrictions
and allowed more businesses to reopen. At 4.8 million, the net addition in
payrolls was handily a record single-month gain, and topped consensus
expectations…The unemployment rate in June also trended lower from May, falling
2.2 percentage points to 11.1%.” Story at...
JOBLESS CLAIMS (MarketWatch)
“Initial jobless claims, a rough gauge of layoffs, dipped
to 1.43 million in the seven days ended June 27 from 1.48 million in the prior
week…” Story at…
FACTORY ORDERS (Reuters)
“New orders for U.S.-made goods rebounded in May,
suggesting a turnaround in manufacturing, though business spending will likely
contract again in the second quarter amid cheaper crude oil as the COVID-19
pandemic depressed global growth. The Commerce Department said on Thursday
factory orders increased 8.0%...” Story at…
PAUL SCHATZ COMMENTARY EXERPT (Heritage Capital)
“…technology is leading and with that comes the
all-important semiconductors. Discretionary is also very strong. However, all
is not well in Hooville. Banks and transports are still lagging in grande
fashion. That cannot and should not be ignored. High yield bonds have gone from
darling to the doghouse since early June and that’s concerning, especially now
that the Fed is the single biggest buyer in the history of the universe.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 4:45 PM Thursday. Over the last week, new cases have been growing faster
than they were in April. There were about 64,000 new cases today, significantly
more than yesterday. 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. The 14-day Growth Rate is
1.15 and that means the Coronavirus is now back in pandemic mode in the US.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.5% to 3130.
-VIX dipped about 6% to 26.83.
(VIX is now lower than the day-by-day comparison to the 2009 recovery after the
March 2009 bottom. This tends to support the argument that we have seen the
final bottom of this correction and suggests further strengthening is possible.)
-The yield on the 10-year Treasury dipped slightly to
0.673%.
Looking at the charts; the S&P 500 moved higher
today, above the blue downtrend line, so we can’t conclude there is a
downtrend, at least based on the charts. The Index still needs to get back above
the upwardly moving red line (resistance) so we can feel more confident that it
is in an uptrend. The Index remains above its 200-dMA (red triangles) and that’s
good. Indicators are giving weak signals, with indicators mixed.
The daily sum of 20 Indicators remained -4 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations declined from -51 to -52 (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; the Short-Term Indicator improved to NEUTRAL. 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…
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
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.
