“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
FOMC MINUTES (fxstreet)
“Minutes of the FOMC's September 15-16 meeting showed on
Wednesday that participants believe the economic activity was recovering faster
than expected from its depressed second-quarter level according to incoming
data...Most participants raised the concern that fiscal support so far might
not provide sufficient relief." Story at...
EIA CRUDE INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 0.5 million barrels from the
previous week. At 492.9 million barrels, U.S. crude oil inventories are about
12% above the five year average for this time of year.” Story at...
http://ir.eia.gov/wpsr/wpsrsummary.pdf
WHY THIS IS STILL A SELLABLE RALLY (Real Investment Advice)
“Notably, while the rally that we have witnessed from the
recent lows has eaten up a fair bit of the previous oversold
condition, the MACD “buy signal” was triggered on Friday. Such
suggests that we could see some additional buying next week. However,
again, with the failure at the 50-dma, such means continuing to use rallies to
rebalance risks accordingly...while the very short-term technicals are bullish,
the intermediate-term measures have not reversed yet. Such could limit upside
potential from current levels.” Commentary at...
https://realinvestmentadvice.com/technically-speaking-why-this-is-still-a-sellable-rally-for-now/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 8:00pm Wednesday. 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.
-The yield on the 10-year Treasury slipped to 0.782%.
There are a lot of Bull signs in the S&P 500
indicators: The Index is 1.4% above the 50-dMA; Breadth MACD has flipped to
positive; MACD of S&P 500 price is positive; the 5-10-20 timer switched to
Buy Wednesday; the New-high trend-chart is turning up; the daily sum of
20-indicators reflects this bullish tone, too.
The daily sum of 20 Indicators improved from +4 to +8 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from -6 to +6. (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 catch is that the S&P 500 is now 9.8% above its
200-dMA. The 10-15% zone is the sell signal, but when sentiment is considered,
it is already too high.
I’m tempted to trade the market now, but the upside is somewhat
limited. The Index could get about 5%
higher, but it could go a lot lower, though, so the risk/reward is iffy. 4 years ago, the S&P 500 drifted down
into the election and bottomed 2 days after election day – that scenario seems
reasonable.
The Long Term NTSM indicator ensemble has been HOLD for
the last 9 days after a SELL before that. The Volume indicator is positive;
Sentiment and Price Indicators are neutral; VIX remained negative. VIX is one of my more reliable indicators,
but we do need to see more than one sell-indicator to give us a sell overall.
It’s not important at this point since we got the Sell signal 3-days after the
2 Sep top.
I remain bearish, but open to the possibility that more
bull may be coming.
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
WEDNESDAY 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.
