“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 [Supreme]
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.
PERSONAL SPENDING / PCE PRICES (WSJ)
“Consumer spending, the biggest source of economic demand
in the U.S., rose 0.5% last month after surging in March, the Commerce
Department said Friday... The Commerce Department’s inflation measure showed
consumer prices rose 0.6% in April from a month earlier and 3.6% from a year
earlier. ” Story at...
https://www.wsj.com/articles/consumer-spending-personal-income-april-2021-11622154969
CHICAGO PMI (ShareCast)
“The MNI Chicago business barometer rose to 75.2 from
72.1 the month before, hitting its highest level since November 1973 and
beating expectations for a reading of 68.0.”
Story at...
UNIV MICHIGAN SENTIMENT (Univ Michigan)
“A falloff in consumer confidence in May is due to
surging inflation that consumers anticipate will persist in the year ahead,
according to the University of Michigan Surveys of Consumers... Buying plans
were curtailed by a substantial increase in complaints about current prices for
homes, vehicles and household durables, Curtin says. The month-to-month change
in references to high prices was at an all-time high in May, with highest
mentions of high prices for homes since the 1950s and for vehicle and household
durable prices since the early 1980s.” Press release at...
https://news.umich.edu/record-concerns-about-rising-prices/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 7pm 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 0.1% to 4204.
-VIX rose about 0.1% to 16.76.
-The yield on the 10-year
Treasury dipped 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%.
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500.
-Slope of the 40-dMA of New-highs is rising.
-McClellan Oscillator is bullish.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are
both above the 20-dEMA.
-MACD of S&P 500 price made a bullish crossover 27 May.
-My Money Trend indicator is rising.
-Short-term new-high/new-low data is rising.
-The smoothed advancing volume on the NYSE is rising.
-58% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-The size of up-moves has been larger than the size of
down-moves over the last month, but not enough to give a signal.
-VIX is flat - neutral.
-We had 5 Distribution Days recently, but not enough to
send a signal.
-Bollinger Bands – currently neutral.
-RSI.
-Overbought/Oversold Index (Advance/Decline Ratio).
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means the signal is leaning bearish.
-The Fosback High-Low Logic Index is neutral.
-There have been 5 Statistically-Significant days in the
last 15-days. This signal can be Bearish or Bullish. Let’s call it neutral now.
-There have been 5 up-days over the last 10-days.
Neutral.
-There have been 11 up-days over the last 20 days.
Neutral
-Statistically, the S&P 500 gave a panic-signal, 12
May. This one can be bearish or bullish. The signal has expired.
-The market has broadened out; 16.6% of all issues
traded on the NYSE made new, 52-week highs when the S&P 500 made a new
all-time-high 7 May. (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% - maybe. This number is
getting so high that one wonders whether it is too bullish.
-14 May, the 52-week, New-high/new-low ratio improved by 0.7
standard deviations, somewhat bullish, but not enough to give a signal.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 19 May, but it is very close to a bullish
crossover now – let’s call it neutral..
-Long-term new-high/new-low data has stalled and is flat.
-The Smart Money (late-day action) is flat. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-The S&P 500 is out-performing Utilities ETF (XLU),
but not by much, so I’ll still call this one neutral for now.
BEAR SIGNS
-The S&P 500 is 12.3% above its 200-dMA (Sell point
is 12%.). 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.
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 12
bear-signs and 2 bull-signs. Last week, there were 9 bear-signs and 6
bull-signs.
There are 3 top-signal; (1) The
Index is too far ahead of breadth. (2) The Index is too far ahead of its
200-dMA. (3) Money trend is too far ahead of the S&P 500.
The daily sum of 20 Indicators
slipped from +5 to +4 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations rose from -6 to -+2
(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 HOLD. Volume, Price, VIX, & Sentiment are neutral.
The Friday rundown is bullish. Now we just need to convince Mr. Market. He still doesn't seem convinced. The Index remains stalled and that continues to be a concern. For now, I'll follow the indicators.
I increased stock allocation
in the portfolio to a fully-invested, 50% in stocks, Tuesday. I am not super
bullish, but I am not bearish either so 50% is a more reasonable allocation
than being under-invested. I added the XLB-Materials ETF.
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 25 May, my
stock-allocation is about 50% 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.
