“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
"The extent to which the president, President Trump,
for months leading up to January 6 spread the notion that the election had been
stolen or that the election was rigged was a lie and people need to understand
that. We need to make sure that we as Republicans are the party of truth that
we are being honest about what really did happen in 2020..." - Liz Cheney, US Republican
Representative, Wyoming.
“January 6 is going to leave a scar. For 220 years one of
the most beautiful things about America has been a peaceful transfer of power.
But what we saw three weeks ago was ugly, shameful mob violence to disrupt a
Constitutionally-mandated meeting of Congress to affirm that peaceful transfer
of power...It happened because the president lied to you. He lied about the
election results for 60 days. Despite losing 60 straight court challenges, many
of them handed down by Trump-appointed judges...He lied by saying the vice
president could violate his constitutional oath and declare a new winner. That
wasn't true.” - Ben Sasse, US Republican Senator, Nebraska.
This country was founded by the bayonet; it survives by
the ballot. Those who falsely disparage
the honesty of our elections are striking a blow at the foundations of our
nation and should be charged with sedition. – Meade Stith
HOUSING STARTS / PERMITS (Crain’s Cleveland Business)
“U.S. home-construction starts fell in January for the
first time in five months, signaling that rising residential real estate prices
may be constraining buyer demand. Residential starts dropped by 6% from the
prior month... Applications to build, a proxy for future construction, surged
10.4% to an 1.88 million pace, the highest since May 2006.” Story at...
https://www.crainscleveland.com/real-estate/us-housing-starts-fell-january-first-time-august
JOBLESS CLAIMS (Yahoo Finance)
“Weekly unemployment claims unexpectedly surged last week,
rising above 800,000 as the labor market recovery stalled.” Story at...
PHILADELPHIA FED INDEX (FxStreet)
“The headline Diffusion Index of the Federal Reserve
Bank of Philadelphia's Manufacturing Business Outlook Survey
dropped to 23.1 in February from 26.5 in January.” Story at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 7.3 million barrels from the
previous week. At 461.8 million barrels, U.S. crude oil inventories are at the
five-year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
KROGER CLOSES MORE STORES OVER “HAZARD PAY” LAWS
(ZeroHedge)
“The nation's second-largest grocery chain has announced
the closure of two stores in Seattle, after the city
passed a $4-an-hour hazard pay mandate for grocery workers, according to
the Washington Post. "Unfortunately,
Seattle City Council didn’t consider that grocery stores — even in a pandemic — operate on
razor-thin profit margins in a very competitive landscape,"
the company said in a statement. "When you factor in the increased costs of operating during
covid-19, coupled with consistent financial losses at these two locations, and
this new extra pay mandate, it becomes impossible to operate a financially
sustainable business."...The move comes two weeks after Kroger
announced the closure of stores in Long Beach, California over similar hazard
pay legislation, blaming local officials after they passed a law mandating that
grocery stores with at least 300 workers nationwide or 15 employees within Long
Beach to pay an additional $4 an hour for a 120-day period.” Story at...
https://www.zerohedge.com/economics/kroger-closes-more-grocery-stores-over-hazard-pay-laws
My cmt: The law of unintended consequences; or no good-deed
goes unpunished.
CORONAVIRUS (NTSM)
Here’s the latest from the
COVID19 Johns Hopkins website as of 5:15pm Thursday. 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
-Thursday the S&P 500 dropped
about 0.3% to 3919.
-VIX rose about 3% to 22.06.
-The yield on the 10-year
Treasury rose to 1.300%.
There’s not much change from yesterday’s blog; this
one’s almost a repeat.
The market action continues to
hint at a weakness. The markets opened lower and made progress during the day,
but didn’t manage to close in positive territory. I have no guess when a
pullback (if any) might begin, but as others have pointed out, February and
March have been bad months in the last 2 years.
The daily sum of 20 Indicators declined from -1 to -5 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations dipped from +11 to +8 (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.
There are a few bear signs
around, but the market has been ignoring these and only one is a top indicator:
The S&P 500 is 14.7% above its 200-dMA (Sell point is 12%.); when Sentiment
is considered, the signal is also bearish. (This is a Top Indicator, but the
market has been ignoring this value for quite a while.) Cyclical Industrials (XLI-ETF)
is underperforming the S&P 500 index on a 40-day basis. That’s bearish, too.
We still see 2 very bullish buy-signals:
Both the Long-term and Short-Term Fosback Logic Indicators are saying “Buy.”
That’s because the number of New-Lows has been very small and the number of
New-Highs has been very high.
The Long Term NTSM indicator
ensemble remained HOLD. Volume is Bullish; VIX, Sentiment & Price
are neutral.
I am still conservatively positioned, but I did add the
XLE-ETF 10 Feb. I won’t rush to add more
stocks, but I may bump stock holdings up to get to 50%, fully invested, if we
can get a pullback and identify a buy signal.
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
THURSDAY 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.
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 40% invested in stocks. You may wish to have a higher or lower % invested
in stocks depending on your risk tolerance. 40% is a 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.
