“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
PERSONAL SPENDING (Atlanta Journal Constitution)
“U.S. consumer spending slowed in August and personal
income fell as a $600 weekly benefit for Americans who are unemployed during
the pandemic expired. The Commerce Department reported Thursday that spending
grew by just 1%...” Story at...
PCE PRICES (KitcoNews)
“On a monthly basis, the core PCE price index was up 0.3%
in August, in line with market forecasts, the U.S. Department of Commerce said
on Thursday.” Story at...
JOBLESS CLAIMS (MarketWatch)
“The number of Americans who applied for jobless benefits
fell slightly in mid-September to the lowest level since the start of the
coronavirus pandemic, but the threat of fraud and other problems in California
made it hard to get a good read on how much the labor market is improving. Initial
jobless claims filed through state programs dropped to 837,000 in the week
ended Sept. 26...” Story at...
ISM MANUFACTURING (Reuters)
“U.S. manufacturing activity unexpectedly slowed in
September as new orders retreated from a more than 16-1/2-year high, in line
with expectations of a moderation in economic growth after a fiscal stimulus
boost over the summer. The Institute for Supply Management (ISM) said on
Thursday its index of national factory activity fell to a reading of 55.4 last
month...” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:45 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.
-Thursday the S&P 500 rose about 0.5% to 3381.
-VIX rose about 1% to 26.70.
-The yield on the 10-year Treasury slipped to 0.677%.
The S&P 500 fell sharply a little before 2PM when
talks on the Stimulus Bill failed to solve the impasse. Prices recovered and
bounced around over the next hour and closed about where they were before the
news came out.
The S&P 500 is 8.7% above its 200-dMA. 10-15% implies sell, but when sentiment is
considered, this is an overbought indication now. This is part of the reason I
think we need a bigger washout on the S&P 500 than we have seen so far – if
we do manage to get back to prior highs, the Index would again be hugely
overbought.
I don’t expect a bounce to be much above a 50%
retracement toward the old highs. We got up to the 42% retracement level today.
VIX was up today. Not a good sign since the S&P 500
was up about 1/2%. Options Traders aren’t buying the rally.
As of today, the S&P 500 is down 5.6% from its
all-time high. This is day 20 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 3111, 8.7% below today’s close.
The daily sum of 20 Indicators improved from -1 to +1 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from -25 to -20. (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 5 days after a SELL before that. The Sentiment, Volume, Price and VIX
Indicators are neutral.
I remain bearish.
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
THURSDAY MARKET INTERNALS (NYSE DATA)
Market Internals improved
to NEUTRAL 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.
