“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
“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
PERSONAL SPENDING / PCE PRICES (Reuters)
“U.S. consumer spending increased by the most in seven
months in January as the government doled out more pandemic relief money to
low-income households...Inflation was benign. The personal consumption
expenditures (PCE) price index excluding the volatile food and energy component
rose 0.3% after a similar gain in December.” Story at...
CHICAGO PMI (ShareCast)
“The MNI Chicago business barometer fell to
59.5 from January’s two-and-a-half year high of 63.8, missing expectations for
a reading of 61.0. A reading above 50.0 indicates expansion...” Story at...
UNIV OF MICHIGAN SENTIMENT (UnivMichigan)
“The Consumer Sentiment Index was 79.0 in the January 2021
survey, just below December’s 80.7 but substantially below last January’s 99.8.”
Press release at...
https://news.umich.edu/consumer-expectations-stabilize-despite-partisan-extremes/
THE REALITY NOBODY WANTS TO ACKNOWLEDGE (Schiff Gold)
“Wall Street traders are convinced that rising bond
yields mean the economy is really strong, and because the economy is really
strong, the Fed is going to raise rates sooner rather than later, and a
premature tightening is going to push up the dollar, and a strong dollar is
going to be bearish for gold.” But Peter [Schiff] said they are completely
wrong in this assessment. Bond yields are not spiking because the economy is strong.
They are spiking because of inflation.
Bond yields are going up because there is a massive
supply of bonds because we have massive deficits. And even though the Fed is
buying a lot of bonds, they ain’t buying enough. So, those extra bonds, there’s
no buyer, and so the price keeps falling...Simply put, the Fed is not going to
fight inflation. It is going to keep stoking the inflationary fire until it’s
burning out of control.” – Peter Schiff, Chief global strategist, Euro Pacific
Capital Inc. Commentary at...
https://schiffgold.com/peters-podcast/peter-schiff-the-reality-the-nobody-wants-to-acknowledge/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:00pm Friday. 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
-Friday the S&P 500 fell
about 0.5% to 3811.
-VIX dropped about 3% to 27.95.
-The yield on the 10-year
Treasury dipped to 1.415%.
In 1999, the year before the stock market, Dot.com crash,
that cut the S&P 500 in half, the TR Price Small Cap Value fund trounced
the S&P 500. Currently, the Small Cap Value fund is outperforming the
S&P 500, 32% to 14% respectively. Just sayin’...
Here’s today’s Friday run-down of some important
indicators. These tend to be both long-term and short-term, so they are
somewhat different than the 20 that I report on daily.
BULL SIGNS
-The 50-dMA % of stocks advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA of the % of stocks advancing on the
NYSE (Breadth) is above 50%.
-The S&P 500 is outperforming Utilities ETF (XLU).
-The smoothed advancing volume on the NYSE is rising.
-Cyclical Industrials (XLI-ETF) are outperforming the
S&P 500.
NEUTRAL
-The Fosback High-Low Logic Index is very bullish. (We’ve
seen high new-highs and low new-lows although that s changing.)
-RSI.
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means it is leaning bearish.
-Bollinger Bands are close to oversold, but are not there
yet.
-Breadth on the NYSE compared to the S&P 500 index is
neutral.
-The 5-10-20 Timer System is HOLD; the 5-dEMA and 10-dEMA
are NOT both above the 20-dEMA.
-Overbought/Oversold Index (Advance/Decline Ratio).
-The Smart Money (late-day action) is falling. This
indicator is based on the Smart Money Indicator (a variant of the indicator
developed by Don Hayes).
-We’ve seen 3 up-days over the last 10-days. Neutral.
-There have been 10 up-days over the last 20 days.
Neutral
-The size of up-moves has been smaller than the size of
down-moves over the last month, but by less than is required to give a signal.
-Statistically, the S&P 500 gave a panic-signal, 27
January. This usually means more downside to come, but the signal has expired.
-The market has broadened out; 7.6% of all issues traded
on the NYSE made new, 52-week highs when the S&P 500 made a new
all-time-high on 12 Feb. (there is no bullish signal for this indicator.)
-6 Jan, the 52-week, New-high/new-low ratio improved by 4.3
standard deviations – very bullish and also rare. Signal has expired.
-46% of the 15-ETFs that I track have been up over the
last 10-days – neutral. This stat is falling sharply so it could be in the Bear
category. For now, let’s call it neutral.
BEAR SIGNS
-Distribution warnings
-The 10-dMA of stocks advancing on the NYSE
(Breadth) is below 50%
-MACD of S&P 500 price made a bearish crossover 22
February.
-MACD of the percentage of stocks advancing on the NYSE
(breadth) made a bearish crossover 21 Jan.
-McClellan Oscillator is negative.
-VIX is climbing sharply.
-The S&P 500 is 10.5% above its 200-dMA (Sell point
is 12%.); but when Sentiment is considered, the signal is bearish.
-My Money Trend indicator is bearish.
-Long-term new-high/new-low data is falling.
-Short-term new-high/new-low data is falling.
-Slope of the 40-dMA of New-highs is falling.
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 11
bear-signs and 5 bull-signs. Last week, there were 5 bear-signs and 8
bull-signs.
The daily sum of 20 Indicators declined from -7 to -8 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations dipped from -27 to -36 (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 to SELL. Sentiment & Price are neutral; Volume
& VIX are negative.
The S&P 500 closed 0.1% above its 50-dMA.
There’s an old saying on Wall Street: “Never on a
Friday.” Once the markets get into one of these weekly down-moves, they rarely
bottom on a Friday. They typically give participants over the weekend to brood
about their losses and then they show up the next Monday in “sell mode.” This leads to Turning-Tuesday. If the bromide
is true this time, we would expect the markets to bottom Monday.
There were signs of a bottom today, Friday; volume was
smaller as we made the new-low and market internals improved. It was not enough
for me to call a definitive bottom, but for small pullbacks the signals are
small.
Bottom line: I’ll follow the crowd Monday and increase stock
holdings to fully invested if we see a strong move higher. Otherwise, I’ll add
some to stock holdings and then wait-and-see. If I can see a definitive bottom
on Monday, I’ll post during the day, hopefully well before the close, but it
will depend on the numbers.
Friday looked a lot like 29 January, the last time the
Index dipped to the 50-dMA. The markets bounced strongly higher then; it
remains to be seen what will happen this time.
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 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.
