“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
EARNINGS (FACTSET)
“At this point in time, more S&P 500 companies are
beating EPS estimates for the third quarter than average and beating EPS
estimates by a wider margin than average. As a result, the index is reporting
higher earnings for the third quarter today relative to the end of last week
and relative to the end of the quarter. Despite the increase in earnings, the
index is still reporting the second largest year-over-year decline in earnings
since Q2 2009, mainly due to the negative impact of COVID-19 on numerous
industries within the index. However, the S&P 500 is projected to report
year-over-year earnings growth starting in Q1 2021.” Commentary and analysis
at...
https://insight.factset.com/sp-500-earnings-season-update-october-16-2020
CASS FREIGHT INDEX - SEPTEMBER (CASS Information Systems)
“The Cass Freight Index shows the “V” shape of the
recovery...We should see positive y/y comps for the first time
all year in October, if the absolute level just holds at September levels...
Cass Freight Index shipment volumes were only 1.8% below year-ago levels...significantly
better than last month’s (7.6%) y/y change, and the best comp reported since
November 2019.” Press release at...
https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/september-2020
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:20pm Monday. 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.
SUBSTANTIAL THIRD WAVE OF CORONAVIRUS CASES (CNBC)
“In the U.S., coronavirus cases were growing by 5% or
more in 38 states, as of Friday, according to a CNBC analysis of data compiled
by Johns Hopkins University that uses a weekly average to smooth out the
reporting. The nation is averaging roughly 55,000 new coronavirus cases every
day, a more than 16% increase compared with a week ago.
“It’s still not too late to vigorously apply good public
health measures, and again I emphasize without necessarily shutting down the
country,” White House coronavirus advisor Dr. Anthony Fauci told Johns Hopkins
University during a recorded Q&A on Thursday.” Story at...
MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell about 1.6% at 3427.
-VIX rose about 6% to 29.18.
-The yield on the 10-year Treasury rose to 0.770%.
The S&P fell hard today and is now about 0.8% above
its 200-dMA. The move was statistically significant. That just means that the
price-volume move up exceeded my statistical parameters. Statistics show that a
statistically-significant, up-day is followed by a down-day about 60% of the
time.
We also had extremely high,
unchanged-volume. Some feel that when the NYSE volume is high for stocks sold
without a change in price, it signals investor confusion and a possible turning
point. I’ve tried to develop an
indicator based on this without much success.
Sometimes it’s true; sometimes not. It was so high today that perhaps it
will be true this time.
SOME BEAR SIGNS
MACD of stocks advancing on the NYSE (breadth) made a bearish
crossover, today, 19 Oct.; The McClellan Oscillator also dropped below zero; The
S&P 500 is 9.7% above its 200-dMA. (Sell point is 12%.) When Sentiment is
considered, the signal is bearish.
The daily sum of 20 Indicators dropped from +4 to -4 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations slipped from +65 to +53. (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 correction is now 32 days old and the Index is 4.3%
below its prior high. Top to Bottom, the avg correction under 10% lasts about
35 days; the avg correction greater than 10% lasts 68 days, excluding major,
50%-crashes.
The Long Term NTSM indicator ensemble has been HOLD for
the last 17 days after a SELL before that. The Volume, Sentiment and Price
Indicators are neutral. VIX is bearish.
I remain bearish, but I’m watching the indicators. While
internals are pointing down, we may see a reversal after today’s big, down-day.
The Stimulus Bill is the wild card, I guess.
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
MONDAY MARKET INTERNALS (NYSE DATA)
Market Internals dropped
to BEARISH.
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.
