“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 declined in August for the first time
in four months led by fewer openings in the construction and retail sectors,
and fewer workers quit their jobs. Job openings, a measure of labor demand,
fell by 204,000 to 6.49 million on the last day of August...” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 8:45pm Tuesday. 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
-Tuesday the S&P 500 fell about 1.4% to 3361.
-VIX rose about 5% to 29.48.
-The yield on the 10-year Treasury slipped to 0.741%.
When I looked at the market around mid-day, the internals
were tearing higher even though the Index was down slightly. That changed when word came out that Trump killed
the stimulus bill until after the election.
When the market gets stretched (as it still was earlier
today), there is usually some piece of news that starts the selling. Today, it
was clearly President Trump’s “cancellation” of the Stimulus Bill. Rumor has it
that there was belief in the Administration that the Democrats were not
negotiating in good faith, since they didn’t want Trump to have a victory before
the election. Maybe, but I’m not sure
how his action helps his election chances.
In any event, Wall Street was surprised so the S&P 500 again dropped
below the 50-dMA (by 0.2%).
As of today, the S&P 500 is down 6.1% from its
all-time high. This is day 23 of the correction. The average time from top to
bottom for a correction is 35-days for corrections less than 10% and 68-days
for bigger corrections. The 200-dMA is now 3114, 7.9% below today’s close.
The daily sum of 20 Indicators declined from +8 to +4 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum that
smooths the daily fluctuations remained -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 Long Term NTSM indicator ensemble has been HOLD for the
last 8 days after a SELL before that. The Volume, 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.
My system for calling a bottom needs a re-test of the low
to confirm a bottom. I was leaning
toward increasing stock holdings just on the vastly improved market internal
over the last 2-days. That changed today; we saw deterioration in internals,
but not a complete washout.
The chart still looks ok with higher-highs and higher-lows.
I remain bearish, but open to the possibility that more
bull may be coming. We’ll see.
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.
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
TUESDAY 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 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.
