“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.
IHS MARKIT COMPOSITE PMI / IHS MARKET SERVICES PMI / IHS
MARKIT MANUFACTURING PMI (IHS MARKIT)
“Adjusted for seasonal factors, the IHS Markit Flash U.S.
Composite PMI Output Index posted 62.2 in April, up from 59.7 in March, to
reach the highest since data collection began in October 2009...
... The seasonally adjusted IHS Markit Flash U.S.
Services PMI™ Business Activity Index registered 63.1 in April, up from 60.4 in
March to signal the fastest expansion in service sector activity since data
collection for the series began in October 2009...
... Manufacturers registered the strongest improvement in
operating conditions since data collection for the series began in May 2007 in
April, as highlighted by the IHS Markit Flash U.S. Manufacturing Purchasing
Managers’ Index™ (PMI ™) 1 posting 60.6, up from 59.1 in March.” Press release
at...
https://www.markiteconomics.com/Public/Home/PressRelease/22fc73216cf444c9b5443bb2a535091e
NEW HOME SALES (MSN.com)
“New home sales occurred at a seasonally-adjusted annual
rate of 1.021 million in March, the U.S. Census Bureau reported Thursday. It represented the fastest pace of new home
sales since 2006.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:45pm 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 1.1% to 4180.
-VIX fell about 7% to 17.33.
-The yield on the 10-year
Treasury rose to 1.564%.
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
-57% of the 15-ETFs that I track have been up over the last
10-days.
-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%.
-McClellan Oscillator is bullish.
-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.
-The size of up-moves has been larger than the size of
down-moves over the last month.
-The smoothed advancing volume on the NYSE is rising.
-Cyclical Industrials (XLI-ETF) are beginning to out-perform
the S&P 500.
NEUTRAL
-Overbought/Oversold Index (Advance/Decline Ratio).
-Bollinger Bands.
-RSI.
-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%.
-Distribution warnings. There have been 2 Distribution
Days in the last 4 days; it would take 6 Distribution Days over 3 weeks or less
to give a sell signal.
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means it is leaning bearish.
-My Money Trend indicator.
-Short-term new-high/new-low data is flat.
-Long-term new-high/new-low data is flat.
-The Fosback High-Low Logic Index is neutral.
-There have been 5 up-days over the last 10-days. Neutral.
-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 S&P 500 is under-performing Utilities ETF (XLU).
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 20 Apr.
-MACD of S&P 500 price made a bearish crossover 22 Apr.
-The Smart Money (late-day action) is now headed down. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-Slope of the 40-dMA of New-highs is falling.
-The S&P 500 is 15.1% 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.
-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.
-There have been 5 Statistically-Significant days in the
last 15-days. This signal can be Bearish or Bullish. It’s negative because the
index is bouncing bac and forth.
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 10 bull-signs. Last week, there were 8 bear-signs and 12 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) the Index is too far ahead of breadth; (3) and the Index is too
far ahead of Money Trend.
These are not enough top
indicators to call a top, but I think we have made a top (or very close to it)
based on price action and other indicators we have seen since 16 April.
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 had a statistically
significant up-day yesterday. As noted above, this is the type of back-and-forth
movement often seen at tops
The daily sum of 20 Indicators
improved from -4 to +9 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations improved from +10
to +11 (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 improved to 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 wouldn’t surprise me if the
Index made a new-high. I just don’t expect
it to get too much above the old high.
80% of the volume was up Friday. If we see another 80% up-volume day on Monday
that would be a bullish sign that might mean we’ll go higher (than I expect) before
any pullback starts.
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 (3977) – 5.1% below
today’s close. (That assumes we actually do have a correction from here.) The
200-dMA is now 3630, 15.1% 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
FRIDAY MARKET INTERNALS (NYSE
DATA)
Market Internals improved to 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.
