“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.
ISM MANUFACTURING INDEX (ISM via PRNewswire)
"The April Manufacturing PMI® registered
60.7 percent, a decrease of 4 percentage points from the March reading of 64.7 percent.
This figure indicates expansion in the overall economy for the 11th month in a
row after contraction in April 2020...The
manufacturing economy continued expansion in April. Survey Committee Members
reported that their companies and suppliers continue to struggle to meet
increasing rates of demand due to coronavirus (COVID-19) impacts limiting
availability of parts and materials. Recent record-long lead times, wide-scale
shortages of critical basic materials, rising commodities prices and difficulties
in transporting products are continuing to affect all segments of the
manufacturing economy.” Press release at...
CONSTRUCTION SPENDING (Nasdaq.com)
“...the Commerce Department released a report on Monday
showing U.S. construction spending rose by much less than expected in the month
of March. The report said construction spending inched up by 0.2 percent to an
annual rate of $1.513 trillion in March after falling by 0.6 percent to a
revised rate of $1.510 trillion in February.”
Story at...
FREAKY MARKETS (Northman Trader)
“...In short, historically speaking, markets are way
overdue for a sizable correction. And this 2009/2010 analog at least provides a
potential roadmap of how this could eventually unfold. Following the 2010
script we may see something like this unfold for an eventual tag of the .382
fib of this rally (note: this chart using the current high with may or may not
be the high):
That fib currently sits at 3436 on $SPX and would go a
long way to fill many of the unprecedented number of open gaps we see on $SPX
since November.” – Sven Henrich, lead
market strategist for NorthmanTrader and analyst and commentator about markets
& the macro economic environment and is a frequent contributor to CNBC, CNN
Business and to MarketWatch. Commentary at...
https://northmantrader.com/2021/04/27/freaky-markets/
ERIC HICKMAN – THE STOCK MARKET’S COLLAPSE IS NEAR (Real
Investment Advice)
“Because stock market performance is an
essential factor in U.S. Treasury behavior, I study it closely...As Jeremy
Grantham, co-founder of Boston investment firm GMO said in his essential
01/04/2021 article “Waiting for the Last Dance,
‘My best
guess as to the longest this bubble might survive is the late spring or early
summer, coinciding with the broad rollout of the COVID vaccine.’
... Many will wait to see the stock market come down before they
believe it, but keep in mind the adage that “a bull
market will do everything to keep you out, a bear market will do everything to keep
you in.” As it comes down, lower prices will entice bulls, who
then end up losing more than they otherwise would as it falls more. They
mistakenly use the prior period’s consistency to trade the new bear market,
which, pun intended, is an entirely different animal.” - Eric Hickman is president
of Kessler
Investment Advisors, Inc., an advisory firm located in Denver, Colorado,
specializing in U.S. Treasury bonds. Commentary at...
https://realinvestmentadvice.com/eric-hickman-the-stock-markets-collapse-in-near/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:30pm Monday. 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
-Monday the S&P 500 rose
about 0.3% to 4193.
-VIX dipped about 2% to 18.31.
-The yield on the 10-year
Treasury slipped to 1.606%.
While I’ve posted a couple of very
bearish commentary pieces above, a market pullback is far from certain and an
outright crash does not seem likely in the near term. Indicators are basically
neutral and the markets could go either way from here – higher, or a short-term
correction.
The 40-dMA of New-all-time highs
on the NYSE is an indicator I like for confirming trend. Today’s number is 266
and that’s higher than yesterday, confirming the up-trend. I wondered whether
it might be too bullish, so I checked back to see what happened when the value was
this high in the past. (My data doesn’t go back farther.) Turns out, the 40-dMA
of new-highs has not been this elevated in the last 7 years. Without priors, we
have no way to know whether this is a bearish or bullish sign, i.e., we can’t
draw any conclusion.
The daily sum of 20 Indicators
improved from -3 to +1 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations improved from +14 to
+17 (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.
I guess I’ll repeat my earlier comment: “We are getting
close to a pullback of some kind.” The
timing is still a guessing game.”
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
MONDAY 2-MONTH GAIN
MONDAY 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.
