“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.
ADP EMPLOYMENT CHANGE (ADP via prnewswire)
“Private sector employment increased by 307,000 jobs from
October to November according to the November ADP National Employment Report®..."While November saw
employment gains, the pace continues to slow," said Ahu Yildirmaz, vice
president and co-head of the ADP Research Institute.”
My cmt:: There were 404,000 jobs added in October. The
consensus Investing.com number was 410,000 jobs added.
EIA CRUDE OIL INVENTORY (Energy Information Administration)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 0.7 million barrels from the
previous week. At 488.0 million barrels, U.S. crude oil inventories are about
7% above the five year average for this time of year.” Press release at...
http://ir.eia.gov/wpsr/wpsrsummary.pdf
WAIT TILL AFTER DECEMBER (CNBC)
“It may be a good time to lock in market gains for the
year. Credit Suisse’s Jonathan Golub believes the latest all-time highs will
run into trouble this month. “If you’re somebody who just came into a boatload
of money ... perhaps [wait] until after inauguration,” the firm’s chief U.S.
equity strategist told CNBC’s “Trading
Nation” on Tuesday. Right now, Golub is most concerned about the
impact of rising coronavirus cases and new lockdowns.” Story at
https://www.cnbc.com/2020/12/01/trouble-lurks-for-stock-market-in-december-credit-suisse-warns-.html
HYPERVALUATION AND THE OPTION VALUE OF CASH (Hussman
Funds)
“One of the most insidious ideas foisted on investors by
Wall Street, in tacit cooperation with activist policy makers at the Federal
Reserve, is the fiction that zero interest rates offer investors “no
alternative” but to speculate in risky securities. Recall that it was exactly
this fiction that led investors to chase mortgage securities during the run-up
to the 2007 market peak and housing bubble, and its collapse in the global
financial crisis...
...The red bars in the chart below show one of the more
extreme syndromes of “overvalued, overbought, overbullish” conditions one can
define. The specific conditions are shown in the chart text. The bars with
yellow shading show instances where this syndrome has been in place, and the
S&P 500 dropped at least 7% over the following month. All of these
instances, prior to those of the past few days, are shaded yellow.” – John
Hussman, PhD.
Charts and commentary at...
https://www.hussmanfunds.com/comment/mc201201/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website at
9:25 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
rose about 0.2% to 3669.
-VIX rose about 2% to 21.17.
-The yield on the 10-year Treasury
rose to 0.939%.
Regarding the new high on 1
December, I said that only 2.8% of stocks made new 52-week highs at the
all-time high. That was not correct. The actual % of new 52-weel highs was
5.2%. That is lower than the 5-year average, but not enough to worry about.
Sorry for the bad info.
Today’s new-high number was low
but not low enough to send a signal.
The daily sum of 20 Indicators
dipped from +6 to +2 (a positive number is bullish; negatives are bearish). The
10-day smoothed sum that smooths the daily fluctuations dropped from +74 to +61.
(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 back up to BUY, 24 Nov. Now, Price, Volume & VIX are
bullish; Sentiment is neutral. The Indicator remains BUY, but I think we are
near a top so I am waiting.
I continue to see very bullish
indicators; but recently there are signs of a weakening market. We’ll have to
see if that trend continues.
The market remains extremely
overbought with the S&P 500 16.3% above its 200-dMA. If past history
follows, that tends to cap the gains going forward.
I’ll continue to keep a low %
of funds in the stock market until I see a better buying point.
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 on the market.
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.
The markets have not
retested the lows on recent corrections and that has left me under-invested on
the bounces. I will need to put less reliance on retests in the future.
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 a correction is deep
enough, 80% would not be out of the question.
