Have a warm, healthy and safe Thanksgiving! All the Best - Meade
“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.
FOMC MINUTES (Nasdaq)
“The
minutes of the November 4-5 Federal Open Markets Committee (FOMC) meeting
yielded little in the way of new info. Fed leaders are determined to
keep borrowing costs low to help the economy recover from the Covid-19
recession. Despite making progress from the worst of the spring, some key
indicators point to economic progress trailing off as cases pick back up. This
dynamic is why policymakers, led by Fed Chair Jerome Powell, vociferously
support more fiscal spending.” Story at...
PERSONAL INCOME / PCE PRICES (kitco.com)
“The Bureau of Economic Analysis said that personal
income dropped 0.7% in October, significantly missing expectations. Economists
were expecting to see an unchanged reading in income... For the year, the core
Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred
inflation measure, rose 1.4%, down from September’s annual rise of 1.6%.” Story
at...
JOBLESS CLAIMS / DURABLE ORDERS / GDP (CNBC)
“The pace of first-time filings for jobless claims picked
up last week, with the jobs market showing increasing vulnerability to the
coronavirus spread. Claims totaled 778,000 for the week ended Nov. 21...
Durable goods orders rose a better-than-expected 1.3%, well above the 0.6% Dow
Jones estimate... the Commerce Department confirmed that gross domestic product
rebounded at a 33.1% annualized pace in the third quarter.” Story at...
https://www.cnbc.com/2020/11/25/us-weekly-jobless-claims.html
A cmt: “Gross Domestic Product (GDP). GDP is
simply the total amount of spending in an economy. GDP, as currently measured,
does not distinguish between “good” spending and “bad” spending. GDP does not
distinguish between consumption spending and investment spending. GDP also does
not distinguish whether spending is generated by existing wealth, by going into
debt temporarily, or by going into debt permanently. In this world, every dollar
spent on education or new means of production, is counted the same as every
dollar spent on epic bachelor parties and video games.” – Michael Lebowitz,
Real Investment Advice
CRUDE INVENTORIES (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 0.8 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.” Press release at...
http://ir.eia.gov/wpsr/wpsrsummary.pdf
BLOW OFF (NorthmanTrader)
“Imagine declaring 2% inflation to
be your long stated policy goal, then printing more money than God and yet
failing to reach your goal for 13 years in a row but still getting uncritically
elevated to God status anyways.
Financial stability they call it. There’s nothing stable
about the $RUT or the global distortions created in capital markets. I call it
speculative excess in context of a historic liquidity bubble. And investors
have embraced it hook, line and sinker. Watch out.” – Sven Henrich. Commentary
at...
https://northmantrader.com/2020/11/24/blow-off/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:00 pm Wednesday. 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.
(I averaged cases over the weekend.)
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped
about 0.2% to 3630.
-VIX dropped about 2% to 21.25.
-The yield on the 10-year
Treasury was 0.886%.
SENTIMENT. Sentiment is reaching extreme levels. I
measure Sentiment as %-Bulls (Bulls/{bulls+bears}) based on the amounts
invested in Rydex/Guggenheim mutual funds. On a standard deviation basis,
values have not yet matched extremes seen during the dot.com crash, but it is
currently at a very bearish 92%-bulls (as of Monday’s close). This isn’t by
itself a great indicator since sentiment can remain elevated for some time, but
it is a level that has preceded pullbacks of varying degrees – from small
pullbacks of a couple % to major crashes.
This is another cautionary indication.
The daily sum of 20 Indicators
remained +6 (a positive number is bullish; negatives are bearish). The 10-day
smoothed sum that smooths the daily fluctuations slipped from 94 to +90. (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 switched to BUY, 24 Nov. Now, Price, Volume & VIX are bullish;
Sentiment is neutral. I am not buying since it looks like we are at, or near a
top of some kind. Big or smal? Don’t know.
I’ll continue to keep a low %
of funds in the stock market. The market remains extremely overbought with the
S&P 500 15.2% above its 200-dMA.
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
WEDNESDAY 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.
