“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.
EARNINGS (FactSet)
“At this point in time, more S&P 500 companies are
beating EPS estimates for the first quarter than average, and beating EPS
estimates by a wider margin than average. As a result, the index is reporting
higher earnings for the first quarter today relative to the end of last week
and relative to the end of the first quarter. The index is now reporting the
highest year-over-year growth in earnings since Q3 2010 for Q1. Analysts also
expect double-digit earnings growth for the remaining three quarters of 2021.
These above-average growth rates are due to a combination of higher earnings
for 2021 and an easier comparison to weaker earnings in 2020 due to the
negative impact of COVID-19 on numerous industries.” Analysis at...
https://insight.factset.com/sp-500-earnings-season-update-april-16-2021
CASS TRANSPORTATION INDEX (CASS Information Systems)
“The shipments component of the Cass Freight Index®
reaccelerated in March to a 10.0% y/y increase, recovering from the slowdown to
4.1% in February from the polar vortex and then some...This freight volume
improvement is consistent with our optimistic outlook, supported by inventory
levels, consumer trends, and the backlog of freight anchored off U.S. ports.
Near-term supply chain risks remain and, following the Suez Canal blockage,
could briefly spread beyond the semiconductor shortages that will affect
vehicle production at least through Q2 and perhaps considerably longer.
However,...If the Cass shipments index just takes a normal seasonal pattern
from here, it will be up over 30% y/y in Q2.” March CASS Transportation Index
at...
https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/march-2021
STOCK MARKET POISED FOR CORRECTION (Business Insider via
MSN.com)
“A stock-market correction could be imminent, according
to a Friday note from LPL's chief market strategist Ryan
Detrick. The S&P 500 has
been on a tear so far in 2021, hitting 23 record highs as investors anticipate
strong economic growth amid a full reopening of the economy. The S&P 500 is
up more than 10% year-to-date, and has surged more than 80% since it bottomed
on March 23, 2020. In the long-term, Detrick believes there's plenty of room for the current bull market in stocks to run higher, but
in the short-term, Detrick sees reason for pause.” Commentary at...
3
reasons the stock market is poised for a near-term correction, according to LPL
(msn.com)
My cmt: The article gave 3 solid reasons for a correction.
INFLATION X-RAY VIEW (Advisor Perspectives)
Charts and commentary at...
THERE IS NO WAY THIS BULL DOESN’T MARKET END VERY BADLY
(RIA)
“While we remain long-biased in our equity portfolios, we
are chasing performance like everyone else...as a portfolio manager, the idea of ‘fully invested
bears’ defines the reality of the markets we live with today. Despite the
understanding that the markets are overly bullish, extended, and valued, we must stay invested or
suffer potential “career risk” for underperformance. Such is the consequence of
the Federal Reserve’s ongoing interventions. Portfolio managers must chase
performance despite concerns of potential capital loss. In other words, we
are all ‘fully invested bears.’ We are all quite aware
this will eventually end badly. However, in the short-term,
no one is willing to take the risk of being grossly underexposed to Central
Bank interventions...For us, that means putting a spin on Warren’s
quote: “If you
engage in the market in an unprotected fashion, you may not want the unexpected
surprise.”
https://realinvestmentadvice.com/there-is-no-way-this-bull-market-doesnt-end-very-badly/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 7:30pm Monday. 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
-Monday the S&P 500 dropped
about 0.5% to 4163.
-VIX rose about 6% to 17.29.
-The yield on the 10-year
Treasury rose to 1.603%.
Top Indicators did not change
from Friday’s reading. Top Indicators that
are currently warning: (1) The Index is too far above its 200-dMA; (2) RSI is
overbought; (3) the Index is too far ahead of breadth; (4) and the Index is too
far ahead of Money Trend.
The daily sum of 20 Indicators
dropped from +4 to -2 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dipped from +63 to
+54 (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. It had slipped to Neutral when I checked around mid-day because
VIX has turned neutral. That changed as
the data improved in the afternoon.
The S&P 500 may have made a top Friday. Dip-buyers may push it up on Tuesday, but I
doubt that it will hold for long if they do. I reduced my %-invested in stocks
to 50% last Monday and I took profits in Intel (INTC) Wednesday. That cut my
%-invested to about 45%. I have been saying, “We are getting close to a
pullback of some kind.” I suspect that it is here, but indicators have not
confirmed it.
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
MONDAY 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.
As of 12 April, my
stock-allocation is about 45% 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.
