“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
RETAIL SALES (CNBC)
“Consumers spent at a much faster pace than expected in
September, with retail sales rising 1.9% in a sign that the U.S. economy’s
biggest driver remains healthy.” Story at...
https://www.cnbc.com/2020/10/16/retail-sales-september-2020.html
INDUSTRIAL PRODUCTION (MarketWatch)
“Industrial production fell for the first time in five
months in September, surprising economists who had expected more steady growth
from the factory sector. Industrial output fell 0.6% in September, the first
decline after four straight months of gains...” Story at...
https://www.marketwatch.com/story/us-industrial-output-declines-unexpectedly-in-september-2020-10-16
UNIV OF MICHIGAN SENTIMENT (pymnts)
“U.S. consumers feel better about the economy than they
have in six months, according to the latest data released by the University of Michigan.
‘The gains were mainly due to a more optimistic outlook
for the national economy,’ Richard Curtin, a University of Michigan economist
who oversees the survey, said in a prepared statement.” Story at...
https://www.pymnts.com/economy/2020/us-consumer-sentiment-continues-to-improve/
CAN TRUMP PULL A SECOND RABBIT OUT OF A HAT? (Pat Buchanan)
“...this thing is not over. For, at this stage of the
2016 campaign, Hillary Clinton was showing equally impressive poll numbers, and
she would go on to lose all eight of those battleground states...” – Pat Buchanan.
https://buchanan.org/blog/can-trump-pull-a-second-rabbit-out-of-the-hat-142262
My cmt: There is a big difference this time around. Four
years ago, when Trump was behind, there was an Ace in the hole. Gary Johnson,
Governor of New Mexico, was running on the Libertarian ticket. Before election
day, he was polling at 7%. CNBC even congratulated him early on election day
(and prematurely as it turned out) for giving the Libertarians enough votes
(5%) to get federal campaign funding for the party. It didn’t happen. Johnson
got less than 2% of the vote. No self-respecting
Libertarian would ever vote Democratic.
Those votes all went to Trump, more than 5%. This time Trump is behind, but his backstop is
gone. He can win, but this isn’t like the last election. If he wins, it will probably
be even closer than last time.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:20pm Friday. 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
-Friday the S&P 500 was little changed at 3484.
-VIX rose about 2% to 27.41.
-The yield on the 10-year Treasury rose to 0.746%.
After 3PM today, the S&P 500 dropped nearly 1%, hardly
a bullish endorsement as we look ahead.
Here’s the Friday run-down of some important indicators.
These tend to be both long-term and short-term so they are somewhat different
than the 20 that I report on daily.
BULL SIGNS
-The 50-dMA and the
100-dMA of the % of stocks advancing on the NYSE (Breadth) are above 50%.
-The 10-dMA of stocks
advancing on the NYSE (Breadth) is well above 50% Friday.
-MACD of stocks advancing on the NYSE (breadth) made a
bullish crossover 1 Oct.
-The 5-10-20 Timer System is BUY; the 5-dEMA and the
10-dEMA are above the 20-dEMA.
-MACD of S&P 500 price made a bullish crossover 8
October.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-63% of the 15-ETFs that I track have been up over the
last 10-days – bullish.
-Cyclical Industrials (XLI-ETF) are outperforming the
S&P 500.
NEUTRAL
-Overbought/Oversold Index, a measure of advance-decline
data – it had been overbought all week.
-Statistically, the S&P 500 gave a panic-signal, 3
September. Now it is Neutral.
-Non-crash Sentiment indicator remains neutral.
-The Fosback High-Low Logic Index is neutral.
-There have been 12 up-days over the last 20 days.
Neutral
-We’ve seen 6 up-days over the last 10-days. Neutral
-Bollinger Bands – neutral. They were bearish 12 Oct.
-RSI was very close to overbought 13 Oct, but it remains
neutral.
-McClellan Oscillator is above zero, but it has been
falling sharply. Let’s call this one neutral.
-The size of up-moves has been about equal to the size of
down-moves over the last month.
BEAR SIGNS
-VIX is still rising too fast.
-The S&P 500 is 11.6% above its 200-dMA. (Sell point
is 12%.) When Sentiment is considered, the signal is bearish.
-Only 2.3% of all issues traded on the NYSE made new,
52-week highs when the S&P 500 made new all-time-highs. (This stays in the
negative column until we make a new high.)
-Breadth on the NYSE vs the S&P 500 index is bearish because
the S&P 500 is outpacing stocks advancing on the NYSE.
-My Money Trend indicator; the
signal is bearish.
-The Smart Money (late-day action) turned down. This
indicator is based on the Smart Money Indicator (a variant of the indicator
developed by Don Hayes).
-The smoothed advancing volume on the NYSE is falling.
-The S&P 500 is under-performing the Utilities ETF
(XLU).
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 8
bear-signs and 9 bull-signs. Last week, there were 5 bear-signs and 10
bull-signs.
The daily sum of 20 Indicators improved from +1 to +4 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations improved from +61 to +64. (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 correction is now 31 days old. Top to Bottom, the avg
correction under 10% lasts about 35 days; the avg correction greater than 10%
lasts 68 days, excluding major, 50%-crashes.
The Long Term NTSM indicator ensemble has been HOLD for
the last 16 days after a SELL before that. The Volume indicator is positive;
Sentiment and Price Indicators are neutral. VIX is bearish.
I remain bearish, but I’m watching the indicators. They could
go either way.
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
FRIDAY MARKET INTERNALS (NYSE DATA)
Market Internals
remained NEUTRAL.
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.
