“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.
US ECONOMY TO GET WORSE BEFORE IT GET’S BETTER
(MarketWatch)
“The U.S. economy is primed to take big strides next year
if a slew of promising coronavirus vaccines turn out to be effective, but it’s
going to get worse before it gets better...employment measured by a...survey of
households turned negative for the first time since the start of the pandemic
in April...The same pattern occurred in the 2000-2001 recession.” Story at...
SEVERE DROP IS EMMINENT (MarketWatch)
“This year’s recovery for equity markets in the face of a
deadly pandemic has been remarkable, so a strong December would seem to follow.
But a “pretty severe” stock drop may have already started, if not a week or so
away, warns our call of
the day, from the True Contrarian blog and newsletter’s chief executive
officer, Steven Jon Kaplan. He says there are plenty of signals flagging
this if investors know where to look. “What I notice the most is investors
crowding into the stock market and making record inflows, while insiders have
never been selling more heavily than they have done in November 2020,” Kaplan
told MarketWatch in an interview and emails.” Commentary at...
MAJOR TURNING POINT NEAR IN MARKETS? [30 NOV 2020]
(Financial Sense)
Chart and video commentary at...
https://www.financialsense.com/video/19791/weekly-update-markets-may-be-near-major-turning-point
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website at
5:40 pm Monday. 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. Looks
like a new record for new cases!
MARKET REPORT / ANALYSIS
-Monday the S&P 500 slipped
about 0.2% to 3692.
-VIX rose about 2% to 21.30.
-The yield on the 10-year
Treasury dipped to 0.926%.
Not much change in indicators today. The commentary I linked above is all negative. Sooner or later we'll be right; so far, not so much.
The daily sum of 20 Indicators declined from +8 to +7 (a
positive number is bullish; negatives are bearish). The 10-day smoothed sum
that smooths the daily fluctuations increased from +60 to +62. (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 are bullish;
Sentiment & VIX are neutral. The Indicator remains BUY, but I think we are
near a top so I am waiting.
The market remains extremely
overbought with the S&P 500 16.8% above its 200-dMA. If past history follows,
that tends to cap the gains going forward. The downside risk is greater than
the upside risk.
As I noted in the last blog
post, Thursday could have been a top, but probably not. At this point it would
take a massive rise tomorrow to trip both RSI and Bollinger bands to bearish,
so a high-probability of success, short-opportunity seems less likely now. Shorting might be the right move; I just don't have enough evidence, yet.
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
MONDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained POSITIVE 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.
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.
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.
