“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
CONSIDERABLE MARKET DOWNSIDE (Yahoo Finance)
“The stock market faces the possibility of significant declines
ahead of the U.S. election as economic and political unpredictability dumbfound
strategists, according to Goldman Sachs Group Inc.’s Abby Joseph Cohen.
“I’m quite concerned that there could be considerable
downside,” depending on “factors that we can’t fit easily into our models,” the
senior investment strategist said in an interview on Bloomberg TV. “This
includes: What will the Congress do? What will the President say? And of
course, the election outcome.” Story at...
https://finance.yahoo.com/news/goldman-abby-joseph-cohen-warns-134409923.html
TREASURY TRACKED BIDEN CORRUPT CASH (Washington Times)
“Democratic presidential nominee Joseph R.
Biden flatly denied at Tuesday night’s debate that his lawyer
son took huge sums of money from corrupt oligarchs and Chinese communists
during his vice presidency, but Treasury Department reports show that Hunter Biden did
receive the money.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 6:30pm Friday. 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
-Friday the S&P 500 rose about 0.9% to 3477.
-VIX dropped about 5% to 25.00.
-The yield on the 10-year Treasury slipped to 0.777%.
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
-Back-to-back high up-volume days Wednesday and Thursday.
-My Money Trend indicator; the
signal is strong
-The 50-dMA and the
100-dMA of the % of stocks advancing on the NYSE (Breadth) are above 50%.
-The 10-dMA of stocks
advancing on the NYSE (Breadth) is well above 50% Friday.
-MACD of stocks advancing on the NYSE (breadth) made a
bullish crossover 1 Oct.
-The smoothed advancing volume on the NYSE is moving up.
-McClellan Oscillator is above zero.
-The Smart Money (late-day action) is headed up. This
indicator is based on the Smart Money Indicator (a variant of the indicator
developed by Don Hayes).
-Short-term new-high/new-low data.
-69% of the 15-ETFs that I track have been up over the
last 10-days – bullish.
NEUTRAL
-VIX improved too Neutral Friday.
-Statistically, the S&P 500 gave a panic-signal, 3
September. Now it is Neutral.
-Non-crash Sentiment indicator remains neutral.
-The Fosback High-Low Logic Index is neutral.
-There have been 12 up-days over the last 20 days.
Neutral
-We’ve seen 7 up-days over the last 10-days. Neutral
-Bollinger Bands – still neutral, but by the slimmest
margin. They are nearly bearish.
-RSI is remains neutral.
-Breadth on the NYSE vs the S&P 500 index is neutral,
but just barely. This indicator is almost bearsh.
-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 5-10-20 Timer System is BUY; the 5-dEMA and the
10-dEMA are above the 20-dEMA.
-MACD of S&P 500 price made a bullish crossover 8
October.
-Cyclical Industrials (XLI-ETF) are neutral relative to
the S&P 500.
BEAR SIGNS
-Overbought/Oversold Index, a measure of advance-decline
data is overbought.
-The S&P 500 is 11.6% above its 200-dMA. (Sell point
is 12%.) When Sentiment is considered, the signal is bearish.
-Long-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.)
-The S&P 500 is under-performing the Utilities ETF
(XLU).
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 5
bear-signs and 10 bull-signs. Last week, there were 9 bear-signs and 5
bull-signs.
The daily sum of 20 Indicators improved from +11 to +12
(a positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from +19 to +35. (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 11 days after a SELL before that. The Volume indicator is positive;
Sentiment, VIX and Price Indicators are neutral.
I remain bearish, but this rally may
have farther to go – not much farther though – the Index is already overbought
on the “%-over the 200-dMA” indicator and that indicator is reliable.
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.
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained BULLISH 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, 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.
