“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.
PPI (FoxBusiness)
“Producer
prices rose in March by the fastest annual pace in 9 ½ years as
the reopening of the U.S. economy forged ahead with more Americans receiving
the COVID-19 vaccine. The
Labor Department said Friday that its producer price index for final demand
rose 4.2% year over year, quickening from last month’s 2.8% increase.” Story at...
https://www.foxbusiness.com/economy/producer-prices-surge-by-most-since-september-2011
TECH BACK IN VOGUE (Heritage Capital)
“Stocks and the financial markets continue to behave
well. While we remain in the world of epic greed and euphoria it is still
balanced off by a solid market foundation and upward momentum. Eventually one
will fade which will lead to an outsized move in one direction. My strong sense
is that it will be the latter and a 10%+ correction will ensue down the road.”
– Paul Schatz, President, Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/tech-back-in-vogue-as-earnings-season-set-to-begin/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:15pm 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 0.8% to 4129.
-VIX dipped about 1% to 16.69.
-The yield on the 10-year
Treasury rose to 1.660%.
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%.
-The smoothed advancing volume on the NYSE is rising.
-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.)
-My Money Trend indicator.
-McClellan Oscillator is bullish.
-Short-term new-high/new-low data is rising.
-The Smart Money (late-day action) is now headed up. This
indicator is based on the Smart Money Indicator (a variant of the 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.
-The S&P 500 is outperforming Utilities ETF (XLU).
-63% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-There have been 2 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 26
March 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.
-Breadth on the NYSE compared to the S&P 500 index is
neutral, but it is very close to giving a bear signal.
-The Fosback High-Low Logic Index is neutral.
-The market has broadened out; 8.1% of all issues
traded on the NYSE made new, 52-week highs when the S&P 500 made a new
all-time-high 9 Apr. (there is no bullish signal for this indicator.) Currently,
the value is above average, but this number has been falling.
-Long-term new-high/new-low data is flat.
-We’ve seen 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 S&P 500 is 15.4% above its 200-dMA (Sell point
is 12%.); when Sentiment is considered, the signal is also bearish.
-Overbought/Oversold Index (Advance/Decline Ratio) is overbought.
-Bollinger Bands overbought.
-RSI.
-Slope of the 40-dMA of New-highs is falling.
-Cyclical Industrials (XLI-ETF) are under-performing the
S&P 500.
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 6
bear-signs and 10 bull-signs. Last week, there were 8 bear-signs and 15
bull-signs.
The Bull-signs outnumbered the
Bear-signs, but all is not well. Among
those Bear signs are 3 Top-indicators that are giving a sell-signal: (1) RSI, (2)
Bollinger Bands and (3) the stretched % above the 200-dMA. The Index is at its upper
trend line and I am surprised at how fast the S&P got there.
The daily sum of 20 Indicators
declined from +10 to +8 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations improved from +36 to
+51 (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 Bullish, but I am going to reduce the % invested
in stocks to 50% on Monday, depending on market action. We are seeing enough
issues to take a little off the table.
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 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.
As of 9 March, my stock-allocation
is about 60% invested in stocks. I plan to reduce the % to 50% Monday, depending
on market action. 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.
