“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.
HOUSING STARTS (CNBC)
“U.S. homebuilding increased more than expected in
October, suggesting the housing market continues to be sustained by
historically low mortgage rates even as the economic recovery shows signs of
strain amid a resurgence in new Covid-19 infections. Housing starts rose 4.9%...”
Story at...
https://www.cnbc.com/2020/11/18/us-housing-starts-october-2020.html
EIA CRUDE INVENTORY (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 0.8 million barrels from the
previous week. At 489.5 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
BULLS GO BALLISTIC – TIME TO REDUCE RISK [Excerpt] (Real
Investment Advice)
“The market has gotten back to more extreme overbought,
extended and bullish levels. Historically, such a setup has led to short-term
corrections, or worse. While the vaccine news this morning is certainly
welcome, the markets have already priced much of that into stocks currently.
Considering a vaccine won’t be widely available to mid-to late-next year, the
economic weakness will continue to weigh on profitability for now.” – Lance
Roberts. Commentary at...
https://realinvestmentadvice.com/technically-speaking-bulls-go-ballistic-time-to-reduce-risk/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 7:20 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.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell
about 1.2% to 3568.
-VIX rose about 5% to 23.84.
-The yield on the 10-year
Treasury dropped to 0.859%.
The S&P 500 rose until
noon and dropped all afternoon; it finished in a freefall and closed at the low.
That’s not a good sign for the bulls. Still, we could see a few back-and-forth
days before we get some real selling.
The daily sum of 20 Indicators
declined from +15 to +11 (a positive number is bullish; negatives are bearish).
The 10-day smoothed sum that smooths the daily fluctuations improved from +117
to +118. (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, 9 Nov. Now, Price, VIX and Volume are bullish;
Sentiment indicator is all neutral. The ensemble remains BUY, but that just
means that the market has been strong. It looks like we’re at a top, so I am
not buying yet.
The extreme overbought market
pretty much guarantees that we’ll have a pullback. I think it will begin sooner
rather than later and it may have started today.
I’ll continue to sit out.
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 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.
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.
