“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
PRESIDENT TRUMP LEAVES HOSPITAL (CNBC)
“President Donald Trump left Walter Reed National
Military Medical Center on Monday to return to the White House, where he will
continue to be treated for the coronavirus even as he looks to restart his
reelection campaign.” Story at...
https://www.cnbc.com/2020/10/05/trump-says-he-will-leave-walter-reed-hospital-at-630-pm-monday.html
My cmt: My daughter is an ER nurse. In the early days of
Covid they sent many patients home with the infection that weren’t sick enough
to be admitted. Some of them returned
later; and some died. Presumably, President Trump will have the best medical
care and will be re-admitted, if needed, before his situation gets out of hand.
I’m just pointing out that even though he has been released, he might not be out
of the woods yet.
ISM NON-MANUFACTURING INDEX (Reuters)
“U.S. services industry activity picked up in September,
pulling above a level that prevailed before the COVID-19 pandemic struck the
nation, amid increases in new orders and employment. The Institute for Supply
Management (ISM) said on Monday its non-manufacturing activity index rose to a
reading of 57.8 last month from 56.9 in August.” Story at...
https://www.reuters.com/article/usa-economy-services-idUSN9N2E8012
WAPO WANTS TRUMP DEAD? (ZeroHedge)
“Within the same hour of news breaking late Thursday
into early Friday morning that Trump and the First Lady are positive
for coronavirus, The Washington Post tweeted, "Imagine what it
will be like to never have to think about Trump again." The tweet via
WaPo's official Twitter account may have been up for as much as an hour, but
it's unclear how fast it was deleted, and garnered many angry responses as news
of the diagnoses broke, before the Jeff Bezos-owned newspaper deleted it.” –
ZeroHedge.
I don’t like Trump. I don’t understand why so many people
do, but really, the Left has lost its mind. And this was the Washington Post,
formerly one of America’s great newspapers.
MARKET RISK NEAR HIGHEST IN HISTORY (Peak Prosperity)
“’Distortion in the cost of credit is the not-so-remote
cause of the raging fires at which the Federal Reserve continues to train its
gushing liquidity hoses. But the firemen are also the arsonists. It was the
Fed’s suppression of borrowing costs, and its predictable willingness to cut
short Wall Street’s occasional selling squalls, that compromised the U.S.
economy’s financial integrity.’ – James Grant, Grant’s Interest Rate Observer.
At age 74, having lived through a number of economic booms and busts as well as
having authored numerous books on the history of financial markets, Jim sees
the degree of speculation, overvaluation and malinvestment in today’s markets
as about as bad as it’s ever been.”
Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 6:30pm 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.
-Monday the S&P 500 jumped about 1.8% to 3409.
-VIX rose about 1% to 27.96.
-The yield on the 10-year Treasury slipped to 0.769%.
The S&P 500 closed 1.3% above its 50-dMA and a lot
indicators improved on what was a very strong day for market internals. Not all
indicators agreed though...
-VIX ROSE 1% while the S&P 500 rose 1.8%? Yes, it is
a rare happenstance. My best indicator (VIX) continues to issue a sell signal.
-Bollinger Bands are nearly overbought on S&P 500.
-The Overbought/Oversold Index (a measure of breadth) is
overbought.
-A big up-day, like today, usually results in a down-day
the next day and sometimes signals a reversal.
Probably the biggest problem for the market: The S&P
500 is again stretched. It is 9.5% above its 200-dMA. (10-15% implies sell.) When
Sentiment is considered, the signal is already bearish.
So where do we go from here? My system for calling a bottom needs a
re-test of the low to confirm a bottom.
Absent that, there are some indicators that would signal a correction
end, but none are particularly bullish now.
Importantly, the S&P 500 is at its 50% retracement
level and that is about where we would expect to see a reversal, so let’s see
what tomorrow brings.
As of today, the S&P 500 is down 4.8% from its
all-time high. This is day 22 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 3112, 9.5% below today’s close.
The daily sum of 20 Indicators improved from zero to +8
(a positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from -19 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 Long Term NTSM indicator ensemble has been HOLD for
the last 7 days after a SELL before that. The Volume indicator is bullish; The
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 on the Index.
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.
*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 improved
to 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.
