“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
“In my decades of investing experience, I have not seen
such mindless and uninformed speculation as I have witnessed
recently. Indeed, in nominal dollar terms...it is far in excess of the
dot.com boom.” – Doug Cass.
“I never imagined that I would see the day that the
Chairman of the House Judiciary Committee would step forward to call for raw
court packing. It is a sign of our current political environment where rage
overwhelms reason.” - Professor Jonathan Turley, honorary Doctorate of Law from
John Marshall Law School for his contributions to civil liberties and the
public interest.
CONSUMER CONFIDENCE (Conference Board)
“The Conference Board Consumer Confidence Index® rose
sharply again in April, following a substantial gain in March. The Index now
stands at 121.7 (1985=100), up from 109.0 in March... “Consumer confidence has
rebounded sharply over the last two months and is now at its highest level
since February 2020,” said Lynn Franco, Senior Director of Economic Indicators at The
Conference Board. “Consumers’ assessment of current conditions
improved significantly in April, suggesting the economic recovery strengthened
further in early Q2. Consumers’ optimism about the short-term outlook held
steady this month. Consumers were more upbeat about their income prospects,
perhaps due to the improving job market and the recent round of stimulus
checks. Short-term inflation expectations held steady in April, but remain
elevated. Vacation intentions posted a healthy increase, likely boosted by the
accelerating vaccine rollout and further loosening of pandemic restrictions.”
Press release at...
https://conference-board.org/data/consumerconfidence.cfm
REGIONAL MANUFACTURING (Advisor Perspectives)
Charts and analysis at...
FED SHOULD START TAPERING NOW, BUT IT WON’T (Bloomberg)
“I suspect that Federal Reserve officials are not the
only ones looking for an uneventful policy meeting this week. The majority of
market participants are also expecting an undramatic event that will include an
upgrade of the economic outlook, a reiteration of uncertainties and the
signaling of nothing new on policies. Unfortunately, it’s an outcome that kicks
the policy can further down the road when the central bank should be thinking now
about scaling back its extraordinary measures.” - Mohamed A. El-Erian, President of Queens' College, Cambridge and chief
economic adviser at Allianz, the corporate parent of PIMCO.
FORWARD RETURNS CONTINUE TO FALL (RIA)
“When markets are incredibly exuberant, as they are
currently, it is not surprising that such is commonly associated with previous
market peaks...The recent market surge marks one of the largest on record [for
the annual rate of change of the inflation-adjusted S&P 500 index from
March 2010 to March 2021]. Such increases typically preceded corrections
(10-20%) to outright bear markets... Beware the investment advisor, pundit, or
superstar investor who is sure that extremely low rates cause incredibly high
stock valuations. There is much to debate about the current level of interest
rates and future stock market returns. However, what is clear is the
40-year decline in rates did not mitigate two extremely nasty bear markets
since 1998, just as falling rates did not mitigate the crash in 1929 and
the subsequent depression.” Lance Roberts, Chief Portfolio Strategist/Economist
for RIA Advisors.
https://realinvestmentadvice.com/technically-speaking-forward-returns-continue-to-fall/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 8:30pm 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 slipped
a point to 4187.
-VIX slipped about 0.5% to 17.56.
-The yield on the 10-year
Treasury rose to 1.631%.
The daily sum of 20 Indicators
improved from +6 to +8 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations improved from +10
to +14 (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 BUY. Price & VIX are bullish; Volume & Sentiment are
neutral. This indicator can be slow to turn.
I have been saying, “We are getting close to a pullback
of some kind.” I suspect that it is here, but it didn’t surprise me that the
Index made a new-high Monday. I just
don’t expect it to get too much higher.
S&P 500 price hasn’t gone anywhere in the last 2
weeks. That’s usually a bad sign, although, it is possible that the market
could have a sideways correction where the Index makes very little progress for
an extended time. That’s rare though,
and I don’t expect it. A pullback is
overdue, but not guaranteed.
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
PEs and DIVIDENDS FOR THE DOW
30
AVG PE of the DOW 30 = 28.6
(excluding negative PEs)
Goldman Sachs is number 1 in
momentum with lowest PE. Looks like a no-brainer
to me. It will be on my Buy-list once we get over the rocky period I am
expecting.
TUESDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained BULLISH 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.
I sold Boeing (BA), Monday. It
is no longer in the top 3 for momentum and has been acting poorly recently. As
of 19 April, my 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. 50% is a conservative position that I consider fully invested for
most retirees.
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, and I can call a bottom, 80% would not be out of the question.
The markets have not
retested the lows on recent corrections and that left me under-invested on the
bounces. I will need to put less reliance on retests in the future.
