“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Despite global surges in COVID cases, the markets are
reflecting the new reality that COVID is here to stay albeit more on our terms
than its.” Kevin Philip, managing director at Bel Air Investment Advisors
TOM MCLELLAN CALLS FOR A SHARP SELLOFF...NOW (msn.com)
“Market timer Tom McClellan, publisher of the
"McClellan Market Report," warned of a "sharp drop" in the
stock market, "beginning imminently," and continuing for a couple of
weeks into January. Among reasons for his view, chart signals suggest the
recent rally in the Dow Jones Industrial Average and S&P 500 to record
highs appear to reflect a "blowoff exhaustion;" negative divergence
in the advance-decline line, which showed most stocks were declining while the
indexes rose; and the fact that the annual seasonal pattern shows a tendency
for the Dow to fall during the first two-to-three weeks of January...” Story
at...
Market
timer McClellan sees sharp stock market selloff 'beginning imminently'
(msn.com)
Jim Cramer disagrees...
WE LIKE THE SETUP INTO 2022 (msn.com)
“I like the set-up for 2022 because so many don't. I like
it because the opportunities to buy winners and surf the broader ETFs are too
great, and because so many companies will prove to have stocks that are too
low, especially the banks, retailers and oil companies. I like it because I
believe the omicron Covid-19 variant blows through the nation quickly with few
deaths and more people joining the workforce.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 7:00 PM ET Friday. U.S. total case numbers are on the left axis; daily
numbers are on the right side of the graph in Red with the 10-dMA of daily
numbers in Green. I added the smoothed 10-dMA of new cases (in purple) to the
chart. Numbers were down today, but it may be Holoday related.
With my cold symptoms hanging on, I am now counting the days. If I can get past day 5-8 without any breathing problems, I should be ok. Any worsening of my symptoms is going to send me on a quest for Plaxovid, the new Pfizer anti-covid pill. I’m eligible to get it due to some immuno-suppression issues, as long as I get a Dr.’s prescription.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 slipped about 0.3% to 4766.
-VIX slipped about 0.1% to 17.25
-The yield on the 10-year Treasury rose a little to 1.514%.
The Friday run-down of some important indicators turned slightly
more to the Bull side (7-bear and 12-bull). These indicators tend to be both
long-term and short-term, so they are different than the 20 that I report on
daily. Details follow:
BULL SIGNS
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is above 50%.
-The 100-dMA % of issues advancing on the NYSE
(Breadth) is above 50%
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 29 December.
-Short-term new-high/new-low data is rising.
-Buying Pressure minus selling pressure is bullish, but
trending down.
-MACD of S&P 500 price made a bullish crossover, 23
December. Strong bulish signal now.
-My Money Trend indicator is rising.
-McClellan Oscillator.
-The Smart Money (late-day action) is rising. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA
are both ABOVE the 20-dEMA.
-The size of up-moves has been larger than the size of
down-moves over the last month.
-59% of the 15-ETFs that I track have been up over the
last 10-days – bullish.
NEUTRAL
-23 December, the 52-week, New-high/new-low ratio
improved by 3.7 standard deviations and the % of new-highs is also increasing –
This signal would be bullish, but it has expired.
-The S&P 500 has had 3 Distribution Days in the last
25-days; Neutral. Others were cancelled by a Follow-thru day 15 December.
-The S&P 500 is 8.8% above its 200-dMA (Bear
indicator is 12%.). This value was 15.9% above the 200-dMA when the 10%
correction occurred in Sep 2020.
-Non-crash Sentiment indicator is bullish (89%-bulls on a
5-day basis), but not enough to send a bear signal. (Too bullish is bearish.)
-Bollinger Bands are neutral.
-Back-to-back >80% up-volume days cancelled two prior
high, down-volume days and gave a bullish buy signal on 7 December. This signal
has expired.
-Breadth on the NYSE is OK when compared to the S&P
500 index.
-The Fosback High-Low Logic Index is neutral.
-RSI is neutral.
-The Calm-before-the-Storm Indicator was warning; then
there were 2 Panic Indicators on 26 & 30 November suggesting more downside
to come. – Signal has expired.
-VIX.
-There have been 10 up-days over the last 20 sessions –
Neutral.
-There have been 5 up-days over the last 10-sessions –
Neutral.
-Cyclical Industrials (XLI-ETF) are under-performing the
S&P 500 – the trend is getting better so let’s call this one neutral.
-There were Hindenburg Omen signals 13 & 16 December. These have been cancelled because the
McClellan Oscillator turned positive.
-There have been 3 Statistically-Significant days (big
moves in price-volume) in the last 15-days. This can be a bull or bear. Now
it’s neutral.
-4.5% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high, 29 December. (There is no
bullish signal for this indicator.) This indicates that the advance has
broadened out some. We need to see this
trend continue.
BEAR SIGNS
-Long-term new-high/new-low data is falling.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is below 50% today.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
has been below 50% for 14 consecutive days.
-The smoothed advancing volume on the NYSE is falling.
-Overbought/Oversold Index (Advance/Decline Ratio) is
overbought.
-Slope of the 40-dMA of New-highs is down. This is one of
my favorite trend indicators.
-The S&P 500 is under-performing the Utilities
ETF (XLU) over the last 40 sessions.
On Friday, 21 February, 2 days after the top before the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there
are 7 bear-signs and 12 bull-signs. Last week, there were 8 bear-signs and 12
bull-signs.
Tom McClellan mentioned that the advance-decline numbers
are diverging from the S&P 500.
Another way of looking at that is to consider the % of issues advancing
on the NYSE as shown below. It looks bearish to me. It will need to decisively break above the upper
trend-line before we can feel better.
The daily sum of 20 Indicators slipped from +3 to +2
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -16 to -13 (The
trend direction is more important than the actual number for the 10-day value.)
These numbers sometimes change after I post the blog based on data that comes
in late. Most of these indicators are short-term so they tend to bounce around
a lot.
The Long Term NTSM indicator ensemble
remained HOLD. Price is bullish; VIX, Volume & Sentiment are Neutral.
I saw an analyst mention that since the Covid numbers
were peaking and the markets were peaking too, it indicated that markets weren’t
worried about the virus. Makes sense.
I did sell Apple today. When I
looked at the chart it had made a triple-top not long ago. I’m a bit nervous
about the markets, but the indicators are leaning bullish so I am probably
overreacting. Apple momentum had been slipping, too.
I am a cautious Bull.
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
FRIDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained to HOLD.
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 stock-allocation in the
portfolio is now about 50% invested in stocks; this is my “normal” fully
invested stock-allocation of 50%. I trade about 15-20% of the total
portfolio.
You may wish to have a higher
or lower % invested in stocks depending on your risk tolerance. 50% is a
conservative position that I consider fully invested for most retirees.
As a general rule, some
suggest that the % of portfolio invested in the stock market should be one’s
age subtracted from 100. So, a
30-year-old person would have 70% of the portfolio in stocks, stock mutual
funds and/or stock ETFs. That’s ok, but
for older investors, I usually don’t recommend keeping less than 50% invested
in stocks (as a fully invested position) since most people need some growth in
the portfolio to keep up with inflation.
