“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“The big money is not in the buying and selling. But in the
waiting.” - Charlie Munger, Vice Chairman, Berkshire Hathaway
CONSUMER CONFIDENCE (MarketWatch)
“Consumer confidence rose in September to the highest
level since the coronavirus pandemic began after the number of cases declined
and the economic forged ahead, a closely followed survey showed. The index of
consumer confidence rose to 101.8 this month from 86.3 in August...” Story
at...
CONTRARIANS BULLISH DUE TO BEARISH TRADERS (MarketWatch)
“Recent U.S. stock market weakness does not represent the
beginning of a new bear market, according to a contrarian analysis of
short-term market timers. That’s because those timers have reacted to the
market’s recent pullback by rapidly turning bearish. At major tops, in
contrast, their typical behavior is to stubbornly hold onto their bullishness.”
Story at...
My cmt: Interesting, but I don’t see this in my sentiment
numbers. Back in December 2018 we had a 20% correction, but when the S&P
500 was down about 10% (as it was last week) the 5-dMA of %-bulls was 83%. When
the S&P 500 was down about 10% last week, the %-bulls was the also 83%. It
doesn’t appear that sentiment is so low that we can’t fall farther. In my
system, I’d have to see sentiment at 65%-bulls before sentiment would be
calling a buy. (My Sentiment is measured as a 5-dMA of %-Bulls
(Bulls/{bulls+bears}) based on the amounts invested in selected
Rydex/Guggenheim mutual funds.)
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:45 Tuesday. US total case numbers are on the left axis; daily numbers are
on the right side of the graph with the 10-dMA of daily numbers in Green.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dipped about 0.5% to 3335
-VIX rose about 1% to 26.51.
-The yield on the 10-year Treasury slipped to 0.654%.
For now, it still appears we are in a counter-trend rally,
but we failed at a 2nd try to close above the 50-dMA. Rally over?
Probably not, but we’ll see.
As of today, the S&P 500 is down 6.9% from its
all-time high. This is day 18 of the correction. The average time from top to
bottom for a correction is 35-days for corrections less than 10% and 68-days
for bigger corrections. The 200-dMA is now 3109, 7.3% below today’s close.
The daily sum of 20 Indicators declined from -2 to -6 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations declined from -16 to -25. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term and many are trend following.
The Long Term NTSM indicator ensemble has been HOLD for
the last 3 days after a SELL before that. The Volume Indicator is bearish. Price
and VIX Indicators are neutral.
I remain bearish.
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…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Here’s the revised DOW 30 and its momentum analysis. 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…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
TUESDAY MARKET INTERNALS (NYSE DATA)
Market Internals switched
to NEGATIVE 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.
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 30% invested in
stocks. You may wish to have a higher or lower % invested in stocks depending
on your risk tolerance. 30% is a conservative position that I re-evaluate daily,
but it is appropriate for the correction.
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%; if this correction is deep enough, 80% would not
be out of the question.
