“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
If you follow cartoonist Michael Ramirez, you know he
leans to the right. I think he speaks for a lot of Republicans who, like me,
are furious at Republican representatives (House and Senate) and “their lack of spine.”
UNIVERSITY OF MICHGAN SENTIMENT (Reuters)
“U.S. consumer sentiment unexpectedly fell in early
February amid growing pessimism about the economy among households with annual
incomes below $75,000, even as the government is poised to deliver another
round of COVID-19 relief money... consumers this month appeared to anticipate
higher inflation in the near-term. The survey’s one-year inflation expectation
rose to 3.3%...” Story at...
SPECULATION BLOWS OFF (The Felder Report)
“Not only is the overall level of margin debt hitting new
highs, the 9-month increase in the total amount of margin debt also just soared
to a new record. It’s hard to believe that both of these could be possible
simultaneously...the bear markets following these surges in margin debt were,
to some extent, driven by a natural deleveraging process that took the 9-month
change deep into negative territory.” – Jesse Felder. Commentary and additional
charts at...
https://thefelderreport.com/2021/02/03/the-index-of-the-volume-of-speculation-blows-off/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:20pm 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 rose
about 0.5% to 3935.
-VIX dipped about 6% to 19.97.
-The yield on the 10-year
Treasury rose to 1.207%.
Today, we had
extremely high, unchanged-volume. Some feel that when the NYSE volume is high
for stocks sold without a change in price, it signals investor confusion and a
possible turning point. I’ve tried to
develop an indicator based on this without much success. Sometimes it’s true; sometimes not. Unchanged-volume
was high near the top on 2 September before a 10% pullback, but it has been
higher since then with no pullback.
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 10-dMA of stocks advancing on the NYSE (Breadth)
is above 50%
-The 50-dMA % of stocks advancing on the NYSE (Breadth)
is above 50%.
-The Fosback High-Low Logic Index is very bullish. (We’ve
seen high new-highs and low new-lows although that s changing.)
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are
above the 20-dEMA.
-MACD of S&P 500 price made a bullish crossover 5 February.
-My Money Trend indicator is rising.
-Short-term new-high/new-low data is rising.
-McClellan Oscillator is positive.
-The 100-dMA of the % of stocks advancing on the
NYSE (Breadth) is above 50%.
-The S&P 500 is outperforming Utilities ETF (XLU), and
the outperformance is increasing.
-77% of the 15-ETFs that I track have been up over the
last 10-days – bullish.
NEUTRAL
-VIX is reasonably flat.
-Slope of the 40-dMA of New-highs is flat.
-Bollinger Bands are close to overbought, but are not
there yet.
-Breadth on the NYSE compared to the S&P 500 index is
neutral.
-Long-term new-high/new-low data is flat.
-The market has broadened out; 7.2% 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.)
-RSI is neutral.
-The Smart Money (late-day action) is mixed. This
indicator is based on the Smart Money Indicator (a variant of the indicator
developed by Don Hayes).
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means it is leaning bearish.
-6 Jan, the 52-week, New-high/new-low ratio improved by 4.3
standard deviations – very bullish and also rare. Signal has expired.
-We’ve seen 8 up-days over the last 10-days. Neutral, but
leaning bearish.
-There have been 13 up-days over the last 20 days.
Neutral
-Statistically, the S&P 500 gave a panic-signal, 27
January. This usually means more downside to come, but the signal has expired.
-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 bear
signal.
BEAR SIGNS
-Overbought/Oversold Index (Advance/Decline Ratio).
-The smoothed advancing volume on the NYSE is falling.
-The S&P 500 is 15.5% above its 200-dMA (Sell point
is 12%.); when Sentiment is considered, the signal is also bearish.
-MACD of the percentage of stocks advancing on the NYSE
(breadth) made a bearish crossover 21 Jan., but it is improving and may not be
bearish much longer.
-Cyclical Industrials (XLI-ETF) are underperforming the
S&P 500.
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 5
bear-signs and 11 bull-signs. Last week, there were 3 bear-signs and 11
bull-signs. There’s not too much change from last week. Indicators are looking bullish.
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 improved from +1 to +3 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -15 to -0 (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. Volume is Bullish; VIX, Sentiment & Price
are neutral.
Price action has been choppy recently. It does feel like we might see
a dip greater than the 3% dip that occurred when the Index dropped to the
50-dMA not long ago. At this point, indicators aren’t confirming the “feel” so
it is just a guess. I have no guess when this pullback might begin, but as
others have pointed out, February and March have been bad months in the last 2
years.
I am still conservatively positioned, but I did add the
XLE-ETF 10 Feb. I won’t rush to add more
stocks.
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.
