“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.
MARGIN DEBT AND THE MARKET- CONTINUES RECORD TREND
Chart and commentary at...
HOW DO YOU EAT AN ELEPHANT? (Heritage Capital)
“For the past few weeks, stocks have seen one of those
strong momentum, grinder markets where the trend barely pauses and forces
investors to make uncomfortable decisions. We really haven’t seen any
discernible pullbacks at all since March....These kinds of markets that just
creep and creep higher and higher do not end with a bang. They also don’t end
bull markets. It takes a period of flattening and then a series of small
rallies and declines to possibly end a bull market from behavior like today.
Strong momentum begets strong momentum and higher prices. Eventually, one of
those short, sharp bull market declines pop up and erase most or all of that
previous rally. That is what I am on the lookout for now.” Paul Schatz,
President, Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/how-do-you-eat-an-elephant/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:30pm 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
dropped about 0.7% to 41353.
-VIX rose about 8% to 17.29.
-The yield on the 10-year Treasury
fell to 1.562%.
The daily sum of 20 Indicators
dropped from -2 to -7 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dipped from +54 to
+39 (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.
I noticed dip-buyers pushed sentiment up to 94%-Bulls on
Monday at the close. (The 5-day value was 91%.) As I guessed, the index didn’t manage
to hold higher. I reduced my %-invested in stocks to 50% last Monday and I took
profits in Intel (INTC) Wednesday. I sold Boeing (BA) yesterday (Monday). I am
now 40% invested in stocks. I hadn’t intended to get this low, but my momentum
trades have been failing, so it was time to take profits.
That cut my %-invested to about 40%. I have been saying,
“We are getting close to a pullback of some kind.” I suspect that it is here. Today, the short-term market internals were bearish.
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 (3962) - 4.4% below today’s
close. (That assumes we actually do have a correction from here.)
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
Market Internals slipped to NEGATIVE 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) yesterday (Monday). I am now 40% invested in stocks. I hadn’t intended to get this low, but my momentum trades have been failing, so it was time to take profits.
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.
