“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.
HOUSING STARTS (Reuters)
“Housing starts surged 19.4% to a seasonally adjusted
annual rate of 1.739 million units last month, the highest level since June
2006... Permits for future home building rose 2.7% to a rate of 1.766 million
units last month...” Story at...
https://www.reuters.com/business/us-housing-starts-increase-more-than-expected-march-2021-04-16/
UNIV MICHIGAN SENTIMENT (UnivMichigan)
“The Sentiment Index rose to its best level in a year on
the strength of recent gains in current economic conditions, while future
economic prospects remained unchanged from March.” Press release at...
HARD TO FIND NEW BUYS (Heritage Capital)
“I continue to find it challenging to buy new things
without a pullback. Momentum is as strong as I have seen it in my 32 years in
the business, but at some point, there will be a short and sharp pullback where
the last one in will look laughingly foolish. While I have high conviction on
the things we own, I also love to feed the ducks into spikes higher. That
leaves the burning question of where to redeploy the proceeds.” – Paul Schatz,
President, Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/big-market-day-hard-to-find-new-buys/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 7:30pm 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 0.4% to 4185.
-VIX slipped about 2% to 16.25.
-The yield on the 10-year
Treasury rose to 1.584%.
Here’s Friday’s 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 issues advancing on the NYSE
(Breadth) is above 50%
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA of the % of issues advancing on the
NYSE (Breadth) is above 50%.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 5 Apr.
-MACD of S&P 500 price made a bullish crossover 26
Mar. (It had been bearish for a few days.)
-McClellan Oscillator is bullish.
-The Smart Money (late-day action) is now headed up. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-The size of up-moves has been larger than the size of
down-moves over the last month.
-VIX is falling sharply - bullish.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are
both above the 20-dEMA.
-Slope of the 40-dMA of New-highs is rising.
-67% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-My Money Trend indicator.
-Short-term new-high/new-low data is flat.
-There have been 3 Statistically-Significant days in the
last 15-days. This signal can be Bearish or Bullish. Now it’s neutral.
-Distribution warnings. There was a follow-thru day 15
April and that cancels all prior Distribution Days.
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means it is leaning bearish.
-Bollinger Bands.
-The Fosback High-Low Logic Index is neutral.
-The market has broadened out; 13.2% of all issues
traded on the NYSE made new, 52-week highs when the S&P 500 made a new
all-time-high 16 Apr. (there is no bullish signal for this indicator.)
Currently, the value is above average and suggests that if we do have a correction
from here it would likely be less than 10%.
-There have been 7 up-days over the last 10-days. Neutral,
but close to bearish.
-There have been 12 up-days over the last 20 days.
Neutral
-Statistically, the S&P 500 gave a panic-signal, 27
January. The signal has expired.
-8 Mar, the 52-week, New-high/new-low ratio improved by 3.5
standard deviations very bullish, but the signal has expired.
BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-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.
-The S&P 500 is 16.1% above its 200-dMA (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.
-Overbought/Oversold Index (Advance/Decline Ratio) is
overbought.
-RSI.
-Long-term new-high/new-low data is falling.
-Cyclical Industrials (XLI-ETF) are have been under-performing
the S&P 500.
-The S&P 500 is under-performing Utilities ETF (XLU).
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 8
bear-signs and 12 bull-signs. Last week, there were 6 bear-signs and 10
bull-signs.
The Bull-signs outnumbered the
Bear-signs, but all is not well. 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.
If Bollinger bands were
overbought, I’d say we were at a top. As it is, maybe, maybe not. Late day
action is still bullish, so it appears that the Pros haven’t given up on the
rally yet.
The daily sum of 20 Indicators
improved from +3 to +4 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dipped from +67 to
+63 (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 & Volume are bullish; Sentiment is
neutral.
I remain cautiously Bullish, but I did reduce my
%-invested in stocks to 50% on Monday and I took profits in Intel (INTC)
Wednesday. That cut my %-invested to about 45%. (INTC has been weak recently
even though its momentum is still comparably good.) We are getting close to a
pullback of some kind.
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.
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.
