“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
JOLTS-JOB OPENINGS (Reuters)
“U.S. job openings increased further in July, though more
workers quit their jobs in the retail as well as professional and business
services industries likely because of fears of exposure to COVID-19 and
problems with childcare… U.S. financial markets were little moved by the data.”
Story at…
EIA CRUDE INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 9.4 million barrels from the
previous week.” Press release at…
SHOCKING, SPECTACULAR & DISORDERLY MARKET CRASH (MarketWatch)
“According to Bloomberg data cited in the op-ed, 530 out
of 8,513 listed common stocks in the U.S. trade at more than 10 times sales.
Parlin [founder and Chief Investment Officer, Washington Peak] pointed out that
only once in history have we seen a larger percentage of stocks trading in
excess of 10 times sales. When was that? You guessed it: March of 2000.” Story
at…
My cmt: It is not clear from the article whether the
prediction is for now, or further down the road.
BEARS NOT CEDING (Heritage Capital)
“The pullback is here. Incumbent election years typically
do not see even a 10% correction on a monthly closing basis. Volatility is high
and that needs to calm down a bit. Let’s see if the bulls can muster some
strength and which sectors lead. The market can quickly turn from buying the
dip to selling the rallies.” – Paul Schatz, President Heritage Capital.
Commentary at…
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website at
5:20 Wednesday. Total 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
-Wednesday the S&P 500 rose about 2% to 3399.
-VIX dipped about 8% to 28.81.
-The yield on the 10-year Treasury rose to 0.703%.
Back and forth, big-moves that are statistically
significant (in my system) are typical at a top. Investors can’t seem to decide whether the
markets are going up or down. This type of action signals that there is minimal
upside remaining, at least for a while. We’ve seen 6 statistically-significant
days in the past 3-weeks. 5 or more indicates trouble. (There was almost a seventh today.)
At today’s close, the S&P 500 was 9.8% above its
200-dMA. The number has backed off some, but when sentiment is considered
(another of my indicators) it is still too high and suggests further downside
ahead.
The Long Term NTSM indicator ensemble improved to HOLD. That’s
not surprising given the up day.
The daily sum of 20 Indicators improved from -10 to -1 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations dropped from +5 to +1. (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.
I’ll be watching the internals and looking for a bottom.
No bottom yet. I remain bearish in the
short and intermediate term. I have a small short position in the Nasdaq 100 and
a significant short position on the S&P 500.
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…
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…
WEDNESDAY MARKET INTERNALS (NYSE DATA)
Market Internals remained BEARISH 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 very conservative position that I
re-evaluate daily. The XLE has been a loser for me since I was too early. It is
still yielding over 10%, so I have to remind myself to be patient.
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.
