“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...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
NFIB SMALL BUSINESS OPTIMISM (NFIB)
“The NFIB Small Business Optimism Index declined in
January to 95.0, down 0.9 from December and three points below the 47-year
average of 98. Owners expecting better business conditions over the next six
months declined seven points to a net negative 23%, the lowest level since
November 2013...“The COVID-19 pandemic continues to dictate how small
businesses operate and owners are worried about future business conditions and
sales.” - Bill
Dunkelberg, NFIB Chief Economist. Press release at...
https://www.nfib.com/surveys/small-business-economic-trends/
JOLTS JOB OPENINGS (Bloomberg)
(Feb 9) “U.S. job openings unexpectedly rose in December,
led by increases in business services and retail trade, signaling that
companies were looking to add workers as the nation starts getting vaccinated
against the coronavirus. The number of available positions increased to 6.65
million during the month from a revised 6.57 million in November...” Story
at...
COT – DOLLAR AND RATES ISSUE A WARNING (RIA)
“As discussed in Bull Mania, the signs of market exuberance did not
diminish during the recent correction. With the market well ahead of
fundamentals, as money continues to chase performance, the “risk” remains
elevated...Investors miss that while a warning doesn’t immediately translate
into a negative consequence, such doesn’t mean you should ignore it.
“There remains an ongoing bullish bias that continues to
support the market near-term. Bull markets built on ‘momentum’ are very hard to
kill. Warning signs can last longer than logic would predict. The risk comes
when investors begin to ‘discount’ the warnings and assume they are
wrong. It is usually just about then the inevitable correction occurs.
Such is the inherent risk of ignoring risk.'”
The cost of not paying attention to risk can be
extraordinarily high.” - Lance Roberts, Chief Portfolio Strategist/Economist
for RIA Advisors.
https://realinvestmentadvice.com/technically-speaking-cot-dollar-rates-issue-a-warning/
CORRECTION COMING – “SIGNAL FIRE” – Excerpt (Northman Trader)
“...a sizable correction remains very much overdue for
this market that still appears impervious to all valuation concerns and remains
among the most complacent markets in memory. In 2020 markets didn’t top until
the later part of February. In 2000 markets didn’t top until March. 2021 has yet to show its hand.” – Sven Henrich.
Commentary at...
https://northmantrader.com/2021/02/09/signal-fire-3/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:00pm Tuesday. 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
-Tuesday the S&P 500 dipped
about 0.1% to 3911.
-VIX rose about 2% to 21.643.
-The yield on the 10-year
Treasury dipped slightly to 1.163%.
The S&P 500 fell sharply
at the close; otherwise, it would have had another positive close. It faked me
out and I still didn’t increase stock holdings.
Bollinger Bands are near their
upper-trend line, but RSI is not nearly overbought. I use RSI and Bollinger
Bands together.
The S&P 500 is 15.5% above its 200-dMA (Sell point is
12%.); when Sentiment is considered, the signal is also bearish. Markets are
ignoring this stat, so we may as well ignore it too, for the time being.
I still don’t see many top Indicators warning of a top –
only the % above the 200-dMA. Since the markets had been ignoring that
indicator, it looks like we can go higher.
The daily sum of 20 Indicators declined from +6 to +2 (a positive
number is bullish; negatives are bearish); but the 10-day smoothed sum that
smooths the daily fluctuations improved from -43 to -38 (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 remained HOLD. VIX, Volume, Sentiment & Price are neutral.
A correction from here seems unlikely,
at least for a week or more. It does feel like we will see a dip that will be
more than the 3% or so that occurred when the Index dropped to the 50-dMA not
long ago.
I am still conservatively positioned, but with the FED
pumping liquidity and Biden pledging a huge stimulus bill passing, I am tired
of fighting the FED. I’ll be increasing stock positions soon unless we see some
more signs of a top. (I have been waiting for a down-day, but that hasn’t
worked out either!)
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
Market Internals slipped to 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 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.
