“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
JOBLESS CLAIMS (CNBC)
“First-time claims for unemployment benefits totaled
840,000 last week, higher than expected in another sign that the spike in job
growth over the summer has cooled heading into Election Day.” Story at...
https://www.cnbc.com/2020/10/08/weekly-jobless-claims.html
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 6:00pm Thursday. 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
-Thursday the S&P 500 rose about 0.8% to 3445.
-VIX dropped about 5% to 26.56.
-The yield on the 10-year Treasury slipped to 0.781%.
Bull signs abound as the markets again seem to be headed
into parabolic, irrationally-exuberant territory. It looks like the Pros have
their doubts. Cyclical Industrials (XLI-ETF)
are underperforming the S&P 500. As shown in the chart below, Utilities
(XLU-ETF) are outperforming the S&P 500 on a moving average basis. (A
falling spread in the chart below indicates XLU outperformance.) Last, VIX
remains stubbornly high at 26+. These all strongly suggest coming trouble for US
stock markets.
The daily sum of 20 Indicators improved from +8 to +10 (a positive number is bullish; negatives are bearish). The 10-day smoothed sum that smooths the daily fluctuations improved from +6 to +18. (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 S&P 500 is now 10.6% above its 200-dMA. The
10-15% zone is the sell signal, and when sentiment is considered, it is also
too high.
The Long Term NTSM indicator ensemble has been HOLD for
the last 10 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. I am open to the possibility that more
bull may be coming, but I think we need to see more downside first – we’re already
overbought on the “%-over the 200-dMA” indicator.
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
THURSDAY 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.
