“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
“Bubbles tend to topple under their own weight. Everybody
is in. The last short has covered. The last buyer has bought (or bought massive
amounts of weekly calls). The decline starts and the psychology shifts from
greed to complacency to worry to panic. Our working hypothesis, which might be disproven,
is that September 2, 2020 was the top and the bubble has already popped.”
- David Einhorn, Greenlight hedge fund.
CPI (Advisor Perspectives)
“The Bureau of Labor Statistics released the October
Consumer Price Index data this morning. The year-over-year non-seasonally
adjusted Headline CPI came in at 1.18%, down from 1.37% the previous month.”
Story at...
JOBLESS CLAIMS (CNBC)
“First-time claims for unemployment insurance continued
their decline last week, hitting another pandemic-era low in a sign that the
labor market is gradually improving. The Labor Department reported Thursday
that jobless claims hit 709,000 for the week ended Nov. 7...” Story at...
https://www.cnbc.com/2020/11/12/us-jobless-claims-709000-vs-740000-estimate.html
EIA CRUDE INVENTORY - WEEK ENDING 6 NOV (Energy Information
Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 4.3 million barrels from the
previous week. At 488.7 million barrels, U.S. crude oil inventories are about
6% above the five year average for this time of year.” Story at...
http://ir.eia.gov/wpsr/wpsrsummary.pdf
My cmt: I published last week’s Crude Inventory data
yesterday. Sorry about that.
PRESIDENTIAL ELECTION-COULD TRUMP WIN?
WI, PA, GA, & AZ were won by Biden with less than 1% margin. Many states require a recount if the margin
is less than 1%. Georgia has already announced they will recount. I’d be surprised
if the GOP didn’t demand recounts in the others.
Pennsylvania has several issues ongoing that may give
Trump a win there. ZeroHedge reported:
“A Pennsylvania judge ruled on
Thursday that the state cannot count late ballots which required voters
to provide proof of identification to 'cure' them by an arbitrary deadline set
by the Secretary of State.” Story at...
There is also a bigger issue; the Supreme Court of
Pennsylvania ruled that the state could count ballots received after Election
Day. The US constitution gives the Legislature
the authority to manage the Electoral College, not Courts, so the Court apparently
ruled improperly. It is very possible that Pennsylvania could go to Trump.
NC will finalize counting on Friday, 13 November. Trump
is leading there and should carry it. If he gets North Carolina and Pennsylvania
he will have 252 Electoral College votes; Biden would have 270, the minimum to win.
If the recount in Georgia goes to Trump, then it’s Trump-268;
Biden-259. (The margin of victory is only 0.3% in GA.) The Election would be
decided by the Democratic House of Representatives and they would give the
Presidency to Biden.
That leaves Arizona. The margin between the candidates
there is also 0.3%. If Arizona also went to Trump, he would win.
That’s a lot of "ifs." I don’t believe there has been
widespread fraud and the above scenario is possible, but not likely.
Regarding the GOP fraud-claims, there have been assertions
that people living in one state voted in another and names have appeared on the
GOP hit-list of illegal votes.
Apparently, some members of the military showed up on these lists.
Military members can live in one state while having residency and voting rights
in others. Did the GOP forget to screen-out the military in their fraud lists? I
don’t know, so we’ll have to hope for some real news on the subject. Does
anyone report real news anymore?
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:40 pm 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 dropped
about 1% to 3537.
-VIX rose about 8% to 25.35.
-The yield on the 10-year
Treasury slipped to 0.884%.
The correction is now 50 days
old and the Index is about 1.2% below its prior high. If the S&P 500 closes
above 3581 we’ll have to declare the correction is over.
The daily sum of 20 Indicators
improved from +10 to +13 (a positive number is bullish; negatives are bearish).
The 10-day smoothed sum that smooths the daily fluctuations improved from +49
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.
Yesterday, 11 Nov., we got a
“Breadth Thrust” indication. That’s a very bullish sign, but I am suspicious
that it was related to the vaccine announcement that didn’t seem to make a
durable change (so far) to market sentiment
The Long Term NTSM indicator
ensemble switched to BUY, 9 Nov. Now, Price and Volume are bullish; Sentiment
and VIX indicators are all neutral. The ensemble remains BUY.
The major issue remains: The
S&P 500 is 12.7% above its 200-dMA. (Sell point is 12%.) When the Index gets this high, it puts a
restraint on gains. Markets can go higher, but the risk/reward is skewed to the
downside. Once we see a few more top-indicators turn negative, then we would
expect another dip. At this point, none of my other top indicators are warning
of a top.
I’ll continue to sit out a bit
longer.
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 remained POSITIVE.
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.
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.
