“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.
RETAIL SALES (APNews)
“Retail sales in the U.S. were flat in April after
soaring in March, when many Americans received $1,400 stimulus checks that
boosted spending.” Story at...
INDUSTRIAL PRODUCTION (SanDiegoTribune)
“U.S. industrial production increased for a second
straight month in April as more factories came online after being shutdown by
winter ice storms. Industrial production — which includes output at factories,
mines and utilities — rose 0.7% last month...”
Story at...
CAPACITY UTILIZATON (Reuters)
“Output at U.S. factories increased in April as
operations at plants that were damaged by February’s stormy weather in the
South came back online, offsetting a decline in the production of motor
vehicles. Manufacturing production rose 0.4% last month...” Story at...
UNIV OF MICHIGAN SENTIMENT (MorningStar)
“Consumers sentiment in the U.S. weakened in early May as
Americans' view on both current economic conditions and short-term expectations
worsened in the wake of higher expected inflation. The preliminary estimate of
the index of consumer sentiment released Friday by the University of Michigan
stood at 82.8 in May...” Story at...
IT’S AN ECONOMIC RECOVERY – NOT AN EXPANSION (RIA)
“Given that debt-driven government spending programs have
a dismal history of providing the economic growth promised, disappointment over
the next year is almost a guarantee...The decline in purchasing power, combined
with higher input costs, and potentially higher taxes, will continue to weigh
on confidence near term. There are risks to assuming a strong economic and
employment recovery over the next couple of quarters. The damage from the
shutdown on the economy, and most importantly, small business, suggests
recovery may remain elusive. Most importantly, there is a massive difference
between “getting back to even” versus “growing the
economy.” Commentary at...
https://realinvestmentadvice.com/macroview-nfib-data-says-its-only-an-economic-recovery/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 6:00pm 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 1.5% to 4174.
-VIX dropped about 19% to 18.81.
-The yield on the 10-year
Treasury slipped to 1.626%.
There was more bullish action today and we almost got a
strong buy-signal from volume analysis. The NYSE came close to a 90% up-volume
day, but it failed a couple of the tests, most importantly, the up volume wasn’t
quite 90%. If we have another strong up-volume
day (say above 80%) Monday, that would give a very bullish signal.
The price move in the S&P
500 was bullish too. New-high new-low
data improved today, but there wasn’t a clear buy-signal. Even so, it looks
like the bulls are in control again.
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%.
-VIX is falling sharply - bullish.
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 30 Apr.
-The smoothed advancing volume on the NYSE is rising.
-There have been 6 Statistically-Significant days in the
last 15-days and 5 in a row! This signal can be Bearish or Bullish. Coming off the
recent trip to the 50-dMA, it looks bullish now.
-60% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-The 5-10-20 Timer System is HOLD; the 5-dEMA and 10-dEMA
are NOT both above the 20-dEMA.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to send a signal.
-We had a two Distribution Days last week 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.
-The Smart Money (late-day action) is flat. (This indicator
is based on the Smart Money Indicator developed by Don Hayes).
-There have been 6 up-days over the last 10-days.
Neutral.
-There have been 10 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. I am putting it in the neutral
category since I am not sure wht this signal is saying.
-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.
-The S&P 500 is out-performing Utilities ETF (XLU),
but just barely, so I’ll call this one neutral for now.
BEAR SIGNS
-McClellan Oscillator is bearish.
-Slope of the 40-dMA of New-highs is falling.
-The S&P 500 is 12.8% above its 200-dMA (Sell point
is 12%.); when Sentiment is considered, the signal is also bearish. This value
was 15.9% above the 200-dMA when the 10% correction occurred in Sep 2020.
-MACD of S&P 500 price made a bearish crossover 22
Apr.
-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. This
indicator has gotten worse over the last couple of days.
-Long-term new-high/new-low data is falling sharply.
-Short-term new-high/new-low data is falling sharply.
-My Money Trend indicator is falling.
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 8
bear-signs and 9 bull-signs. Last week, there were 6 bear-signs and 12
bull-signs.
The Bull-signs outnumbered the
Bear-signs, but only by a small amount, so there isn’t a good signal either
way. There are a few top-signals, but
not enough to worry about. Top Indicators that are currently warning: (1) The
Index is too far above its 200-dMA; (2) the Index is too far ahead of breadth;
(3) and the Index is too far ahead of Money Trend.
The daily sum of 20 Indicators
improved from -13 to -4 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations dropped from -34 to
-35 (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
improved to 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. It looks like the bulls are back
in control. I’ll add to stock-holdings Monday and bump stock holdings to about
45%, unless we see panic selling.
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 improved to 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.
