“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.
JOBLESS CLAIMS (CNBC)
“The procession of Americans heading to the unemployment
line fell last week, with jobless claims totaling a fresh pandemic-era low of
444,000, the Labor Department reported Thursday.” Story at...
https://www.cnbc.com/2021/05/20/weekly-jobless-claims.html
PHILADELPHIA FED INDEX (Reuters)
“Factory activity in the U.S. mid-Atlantic region slowed
down in May after hitting its highest pace in nearly half a century earlier
this spring, a survey showed on Thursday. The Philadelphia Federal Reserve Bank
said its business activity index fell to 31.5 from 50.2 in April.” Story at...
LEADING INDICATORS (Conference Board vis PRnewswire)
“The Conference Board Leading Economic
Index® (LEI) for the U.S. increased by 1.6 percent in April to
113.3 (2016 = 100), following a 1.3 percent increase in March and a 0.1 percent
decline in February. "With April's large monthly gain to start the second
quarter, the U.S. LEI has now recovered fully from its COVID-19
contraction—surpassing the index's previous peak, reached at the very onset of
the global pandemic in January 2020,"
said Ataman Ozyildirim, Senior Director of Economic Research at The
Conference Board. "While employment and production have not recovered to
their pre-pandemic levels yet, the U.S. LEI suggests the economy's upward trend
should continue and growth may even accelerate in the near term. The Conference
Board now forecasts real GDP could grow around 8 to 9 percent (annualized) in
the second quarter, with year-over-year economic growth reaching 6.4 percent
for 2021." Press release at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 5:15pm Thursday. 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
-Thursday the S&P 500 rose
about 1.1% to 4159.
-VIX dropped about 7% to 20.67.
-The yield on the 10-year
Treasury dipped to 1.624%.
After issuing a sell-signal yesterday, the 5-10-20 Timer
System improved to NEUTRAL/HOLD today. As I noted yesterday, it is sometimes prone
to whipsaw reversals.
Late-day action remained
bearish. Indicators improved a little, but still aren’t giving a very strong
signal in any direction. That is the problem with small pullbacks; small
pullbacks give small signals, so if one is over or under-invested, it is hard
to rely on indicators to make a decision.
The S&P 500 has not gone
anywhere in a month. On 15 April the Index was 4172. Today it closed at 4159. That’s sending a
caution sign. I don’t like to see the Index stall even if it
is not a clear-cut bearish signal.
We had an intraday retest of
the previous low Wednesday, although for my work I look at internals and price
on a closing basis. On a closing basis, we have not had a suitable retest of
the low. On small pullbacks, we frequently don’t have a suitable retest, so
this isn’t a bearish sign.
On a bullish note, the S&P 500 is beginning to outpace Utilities (XLU-ETF).
The daily sum of 20 Indicators
improved from -6 to -4 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dropped from -48 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 HOLD. Volume, VIX, Price & Sentiment are neutral. The
short-term market internal indicator remained bearish.
All in all, I am going to wait
and see tomorrow. I’d like to be more confident of the trend.
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 a few weeks ago. I am still waiting for a 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
THURSDAY MARKET INTERNALS
(NYSE DATA)
Market Internals remained BEARISH 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.
