“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
DURABLE ORDERS (Marketwatch)
“Orders for durable goods rose 0.4% in August, the fourth
straight gain but a more modest increase after three straight strong gains, the
government said Friday... “The muted 0.4% rise in orders last month signals...that
activity is now more closely aligned with the soft pace of underlying economic
activity that has lost significant momentum since the initial stages of the recovery,”
said Oren Klachkin, lead U.S economist at Oxford Economics.” Story at...
https://www.marketwatch.com/story/durable-goods-orders-rise-modest-04-in-august-2020-09-25
LOOKING FOR A BOUNCE (Heritage Capital)
“The NASDAQ 100 which led the way down forged its lowest
price on September 21. The other four major stock market indices saw their lows
on September 24. That’s the first clue that something may be changing, at least
in the very, very short-term which is how trends begin. I don’t want to read
too much into it just yet...If I had my way, stocks would bounce for a few days
or so, maybe longer, and then head down to new lows in mid to late October, but
bottom well before the election when the masses will be in panic mode because Trump
or Biden may win. Or, no one wins and it ends up in the Supreme Court or on
Nancy Pelosi’s desk.” – Paul Schatz, President, Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/looking-for-a-bounce-now/
HOW ABOUT SOME GOOD NEWS FOR A CHANGE
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website at
5:10 Friday. US 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
-Friday the S&P 500 rose about 1.6% to 3298.
-VIX fell about 7% to 26.38.
-The yield on the 10-year Treasury slipped to 0.658%.
As of today, the S&P 500 is down 7.9% from its
all-time high. This is day 16 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 3107, 6.2% below today’s close.
The daily sum of 20 Indicators declined from -2 to -4 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from -26 to -22. (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.
Here’s the Friday run-down of some important indicators.
These tend to be both long-term and short-term so they are somewhat different
than the 20 that I report on daily.
BULL SIGNS
-The 50-dMA and the
100-dMA of the % of stocks advancing on the NYSE (Breadth) are above 50%.
-Cyclical Industrials (XLI-ETF) are outperforming the
S&P 500.
-The S&P 500 is still outperforming the Utilities ETF
(XLU).
NEUTRAL
-Statistically, the S&P 500 gave a panic-signal, 3 September.
A panic signal usually suggests more to come.
(This signal remains in effect for 7-trading days.)
-Overbought/Oversold Index, a measure of advance-decline
data is neutral.
-Non-crash Sentiment indicator remains neutral.
-The Fosback High-Low Logic Index is neutral.
-There have been 10 up-days over the last 20 days.
Neutral
-We’ve seen 5 up-days over the last 10-days. Neutral
-Bollinger Bands – close to bullish, but still neutral.
-RSI was oversold Thursday, but is now neutral.
-Breadth on the NYSE vs the S&P 500 index is neutral.
-The S&P 500 is 6% above its 200-dMA. When Sentiment
is considered, the signal is also neutral.
-VIX gave a sell-signal Thursday, but switched to Hold
Friday.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to give a signal.
-The Smart Money (late-day action) is mixed. This indicator
is based on the Smart Money Indicator (a variant of the indicator developed by
Don Hayes).
BEAR SIGNS
-MACD of stocks advancing on the NYSE (breadth) made a bearish
crossover 21 Sept.
-The smoothed advancing volume on the NYSE is moving
lower.
-The 5-10-20 Timer System is sell; for now the 5-dEMA and
the 10-dEMA are below the 20-dEMA.
-MACD of S&P 500 price made a bearish crossover 4
September.
-The 10-dMA of stocks
advancing on the NYSE (Breadth) is below 50%.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-Only 2.3% of all issues traded on the NYSE made new,
52-week highs when the S&P 500 made new all-time-highs. (This stays in the
negative column until we make a new high.)
-My Money Trend indicator.
-47% of the 15-ETFs that I track have been up over the
last 10-days – neutral.
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 10
bear-signs and 3 bull-signs. Last week, there were 8 bear-signs and 5 bull-signs.
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
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals declined
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.
