“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.
PPI (Nasdaq)
“The Producer Price Index (PPI) for October
came in slightly better than expected, +0.3% compared with the estimated +0.2%,
both down from the previous month’s +0.4%.” Story at...
https://www.nasdaq.com/articles/producer-price-index-better-than-expected-2020-11-13
UNIV OF MICHIGAN SENTIMENT (Univ Michigan)
“Consumer sentiment fell in early November as consumers
judged future economic prospects less favorably, while their assessments of
current economic conditions remained largely unchanged. The outcome of the
presidential election as well as the resurgence in covid infections and deaths
were responsible for the early November decline.” Report at...
The number came in at 77 vs 81.8 in Oct. The value is down 20% year-over-year.
TEXAS SOCIAL WORKER CHARGED WOTH 134 COUNTS OF ELECTION
FRAUD (Texas Attorney General)
“Attorney General Ken Paxton today [6 Nov] announced that
his Election Fraud Unit assisted the Limestone County Sheriff and District Attorney
in charging Kelly Reagan Brunner, a social worker in the Mexia State Supported
Living Center (SSLC), with 134 felony counts of purportedly acting as an agent
and of election fraud. If convicted, Brunner faces up to 10 years in prison for
these offenses.” Press release at...
My cmt: Fraud exists. Enough to swing the election?
Doubtful.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 5:50 pm 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. Almost
200,000 new cases today!
PFIZER CEO SELLS (The Guardian)
“Pfizer’s chief executive sold shares in the company
worth $5.6m (£4.2m) on the day the drugmaker announced that its Covid-19
vaccine was more than 90% effective in protecting people from
transmission of the virus, triggering a surge in the company’s stock....Pfizer
is working on turning the vaccine into a powder formula. In its
current form, the vaccine has to be
stored at -70C (-94F), which poses significant distribution
challenges, especially for lower-income countries.” Story at...
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose
about 1.4% to 3585.
-VIX fell about 9% to 23.10.
-The yield on the 10-year
Treasury rose to 0.895%.
Correction over. The S&P
500 broke above its 2 Sept high, making a new high.
The daily sum of 20 Indicators
improved from +13 to +14 (a positive number is bullish; negatives are bearish).
The 10-day smoothed sum that smooths the daily fluctuations improved from +68
to +88. (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 and Volume are bullish; Sentiment
and VIX indicators are all neutral. The ensemble remains BUY.
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
-11 Nov., we got a “Breadth Thrust” indication. That’s a rare,
very bullish sign.
-9 Nov. (Vaccine Announcement Day), the 52-week,
New-high/new-low ratio improved by 5.8 standard deviations – very bullish and
also rare.
-The smoothed advancing volume on the NYSE is rising.
-The 10-dMA of the % of stocks
advancing on the NYSE (Breadth) is above 50%.
-The 50-dMA of the % of stocks advancing on the NYSE (Breadth) is
above 50%.
-The 100-dMA of the %
of stocks advancing on the NYSE (Breadth) is above 50%.
-The Smart Money (late-day action) is bullish. This
indicator is based on the Smart Money Indicator (a variant of the indicator
developed by Don Hayes).
-The size of up-moves has been larger than the size of
down-moves over the last month.
-The 5-10-20 Timer System is BUY; the 5-dEMA and the
10-dEMA are above the 20-dEMA.
-MACD of the percentage of stocks advancing on the NYSE
(breadth) made a bullish crossover 4 Nov.
-MACD of S&P 500 price made a bullish crossover 5
November.
-My Money Trend indicator is very bullish.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-McClellan Oscillator is above zero.
-68% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-Bollinger Bands.
-RSI.
-VIX is falling, but has not signaled a buy yet.
-Non-crash Sentiment indicator remains neutral.
-The Fosback High-Low Logic Index is neutral.
-Statistically, the S&P 500 gave a panic-signal, 28
October. This usually means more downside to come, but the bear signal has
expired.
-There have been 11 up-days over the last 20 days.
Neutral
-We’ve seen 7 up-days over the last 10-days. Leaning bearish,
but still Neutral
-Breadth on the NYSE vs the S&P 500 index is neutral.
-Slope of the 40-dMA of New-highs is flat.
-Cyclical Industrials (XLI-ETF) are neutral compared the
S&P 500. (Shorter term it is neutral to down.)
BEAR SIGNS
-The S&P 500 is 14.2% above its 200-dMA. (Sell point
is 12%.) When Sentiment is considered, the signal is also bearish.
-Only 2.0% of all issues traded on the NYSE made new,
52-week highs when the S&P 500 made a new all-time-highs on Friday, 13
November.
-Overbought/Oversold Index (Advance/Decline Ratio) is
overbought.
-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 4
bear-signs and 16 bull-signs. Last week, there were 4 bear-signs and 10
bull-signs.
Investors are very bullish and
the indicators reflect it. The indicators are starting to get a little too
bullish, but I only see one bearish topping indicator.
We have two major issues: (1) The S&P 500 is 14.2%
above its 200-dMA. (Sell point is 12%.) (2) Only 2% of issues on the NYSE made
new-highs at the 13 November all-time high. This advance is too narrow. This suggests
we’ll see a large correction, >10%, when it comes. It should come sooner
rather than later.
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.
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
FRIDAY 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.
