“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.
ADP EMPLOYMENT CHANGE (YahooFinance)
“Private sector employment increased by 742,000 jobs from
March to April according to the April ADP® National Employment ReportTM... "The labor
market continues an upward trend of acceleration and growth, posting the
strongest reading since September 2020,"
said Nela Richardson, chief economist, ADP.”
Story at...
https://finance.yahoo.com/news/adp-national-employment-report-private-121500326.html
ISM NON-MANUFACTURING INDEX (Reuters)
“U.S. services industry activity grew at a slightly
slower pace in April, likely restrained by shortages of inputs amid a burst of
demand that is being driven by massive fiscal stimulus and a rapidly improving
public health environment. The Institute for Supply Management (ISM) said on
Wednesday its non-manufacturing activity index fell to a reading of 62.7 last
month from 63.7 in March, which was the highest on record.” Story at...
https://www.reuters.com/business/us-service-sector-slows-modestly-april-ism-survey-2021-05-05/
EIA CRUDE OIL INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 8.0 million barrels from the
previous week. At 485.1 million barrels, U.S. crude oil inventories are about
2% below the five-year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
ENERGY IS A BUY
The ‘entire energy complex is a buy’ as economy roars
back. - Tom Lee, Managing
Partner and the Head of Research at Fundstrat Global Advisors.
I am still holding XLE (Energy Select Sector SPDR Fund).
XLE has a yield of 4.4% and remains 30% below its all-time highs. I paid $2.77
for gas today. I think those guys can
make money at that price.
SIGNIFICANT CORRECTION WHEN FED HIKES (msn.com)
“David Kelly of JPMorgan Asset Management expects the Fed
to hike rates by the end of 2022, earlier than most expect. He warns a major
market correction could ensue.” Video at...
Strategist
warns of 'significant correction' when the Fed finally hikes rates (msn.com)
My cmt: “Could ensue?” It’s a guaranteed disaster for the
market when the FED begins to raise rates. That’s what happened in year 2000,
the last time we witnessed a FED tightening during a valuation explosion in the
stock market like we are seeing now.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 8:30pm Wednesday. 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
-Wednesday the S&P 500 rose
about 0.1% to 4168.
-VIX slipped about 2% to 19.15.
-The yield on the 10-year
Treasury was 1.583%.
The daily sum of 20 Indicators
declined from +3 to +1 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations improved from +27
to +33 (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. This indicator can be slow to turn.
Pullback? I still think one is coming, but checking the
indicators shows a mostly neutral playing field. Indicators aren’t very strong
in any direction. It would seem likely that until indicators change, the slow
melt-up will continue.
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.
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
Market Internals remained POSITIVE 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.
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.
