“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.
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 0.6 million barrels from the
previous week. At 493.0 million barrels, U.S. crude oil inventories are about
1% above the five year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
IS BOA RIGHT ABOUT A DROP TO 3800? (RIA)
“Recently, Bank of America’s Savita Subramanian discussed
why the market could drop to 3800. She discussed her thesis in her latest
strategy note titled “Five Reasons To Curb Your Enthusiasm.”
...Given the magnitude of the market’s current deviation from the 200-dma, a correction will likely surpass 3800. A retest of the 200-dma seems most probable. Furthermore, the entire market (small, mid, and large-capitalization companies) have all risen sharply in the liquidity-fueled advance from the March 2020 lows. Such provides plenty of fuel for a more significant correction if selling begins in earnest.” – Lance Roberts, Chief Portfolio Strategist/Economist for RIA Advisors. Commentary at...
https://realinvestmentadvice.com/technically-speaking-is-bofa-right-about-a-market-drop-to-3800/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:00pm Wednesday. 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
-Wednesday the S&P 500 rose
about 0.9% to 4173.
-VIX dropped about 6% to 17.50.
-The yield on the 10-year
Treasury dipped slightly to 1.561%.
Today was a statistically
significant up-day. That just means that the price-volume move exceeded my
statistical parameters. Data shows that a statistically-significant, up-day is
followed by a down-day about 60% of the time.
We also had a statistically
significant up-day at the recent top. Statistically-significant, up-days almost
always coincide with tops, but not all statistically-significant, up-days occur
at tops.
It is not unusual to see a big
bounce higher as the dip-buyers move in, like today; I just don’t think the
S&P 500 is likely to make significant new-highs before this pullback gets
underway.
A couple of troubling and
reliable bear signs have been triggered:
-The S&P 500 is 15.3% above its 200-dMA. It was 16.9%
at the recent top (Sell point is 12.); when Sentiment is considered, the signal
is also bearish. This value was 15.9% above the 200-dMA when the 10% correction
occurred in Sep 2020.
-Breadth on the NYSE compared to the S&P 500 index is
bearish – the Index is too far ahead of stocks advancing on the NYSE.
Those 2 indicators are still
warning. Here were several more at the
recent top, 3 days ago.
The daily sum of 20 Indicators
improved from -7 to -5 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dipped from +39 to
+24 (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.
Given that new-highs were good at the all-time new high
for the S&P 500, this pullback is likely to be less than 10%. The most
likely zone for a pullback-bottom would be around the 50-dM (3967) – 5.2% below
today’s close. (That assumes we actually do have a correction from here.) The
200-dMA is now 3620, 15.3% below today’s close, although, I don’t think we’ll
drop that far.
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
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
Market Internals improved 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.
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.
