“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.
HOUSING STARTS / BUILDING PERMITS (Reuters)
“U.S. homebuilding fell more than expected in April,
likely pulled down by soaring prices for lumber and other materials, but
construction remains supported by an acute shortage of previously owned homes
on the market... Housing starts tumbled 9.5% to a seasonally adjusted annual
rate of 1.569 million units last month... Permits for future homebuilding rose...60.9%
compared to April 2020.” Story at...
https://www.reuters.com/business/us-housing-starts-drop-sharply-april-2021-05-18/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 8:00pm 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 dipped
about 0.9% to 4128.
-VIX rose about 8% to 21.34.
-The yield on the 10-year
Treasury rose to 1.645%.
The S&P 500 tanked about
20 minutes before the close. I didn’t
see any news to explain the drop. Bitcoin was down about 4% on the day and it has
been down 27% over the last 10-days. I
think this crypto, risk-off attitude is being adopted by stock market investors.
The biggest bear-sign I have
now is that the S&P 500 is too far above breadth (% of stocks advancing) on
the NYSE. This indicator has been bearish for a month. This used to be a timely
indicator, but these are unusual times with all of the FED’s easy money and stimulus
cash falling from the sky. This is the
only top-indicator that is presently giving a bear-warning
Futures are down as I write
this, so perhaps we are going to see that pullback I expected a while back. The
Index is 1.3% above its 50-dMA. That’s where
the Index bounced up past week. Will it
bounce again? I don’t have very strong indicators in either direction.
The daily sum of 20 Indicators
improved from -2 to 0 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dropped from -38 to
-41 (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, VIX, Price & Sentiment are neutral.
I am at a conservative stock-allocation of only 40% in
stocks because I took profits in both Boeing and Intel due to their dropping
out of the top 3 in momentum in recent weeks. I am still waiting for buying
opportunity.
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 remained NEUTRAL 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 19 April, my
stock-allocation is about 40% invested in stocks. I hadn’t intended to drop
this low, but I took profits in both Boeing and Intel due to their dropping out
of the top 3 in momentum. I’ll move back in when conditions appear more
favorable.
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.
