“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
“People always ask me what is going on in the markets. It
is simple. Greatest Speculative Bubble of All Time in All Things. By two orders
of magnitude.” – Michael “Big Short” Burry.
“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.
"This is one of the big problems with wokeness. That
what you say doesn't have to make sense or jibe with the facts, and a challenge
itself is equated with racism...Saying white power and privilege is at all
all-time high is just ridiculous. Higher than a century ago with the Tulsa race
massacre? Higher than the years when the KKK rode unchecked and Jim Crow went
unchallenged? Higher than the 1960s when the Supremes and Willie Mays could not
stay in the same hotel as the white people they were working with?...Having a
warped view of reality leads to policies that are warped.” – Bill Maher.
BEWARE OF INFLATION 10%-20% CORRECTION COMING (CNBC)
“Moody’s Analytics’ Mark Zandi has a message for investors: Brace for a significant market correction. The firm’s chief economist expects a more hawkish Federal Reserve will spark a 10% to 20% pullback. And, unlike the sharp drops over the past several years, Zandi anticipates a quick recovery won’t be in the cards particularly because the market is richly valued. He estimates it could take a year to return to break even.” Story at...
JUNE MARKET COMMENTARY – 13 June (Hussman Funds)
“When investors form their expectations for returns based
on price behavior, and price behavior is driven by investor expectations in
turn, the feedback loop contributes to self-reinforcing bubbles. The situation
is worse when investors ignore valuations in hopes of limitless “support” from
policy makers, despite the absence of any reliable, mechanistic relationship –
other than psychology itself – linking policy actions and security prices.” –
John Hussman, PhD.
https://www.hussmanfunds.com/comment/mc210614/
SWISS REJECT CLIMATE CHANGE (MishTalk)
“Why Was $66 Billion Spent on Renewables Before the Texas Blackouts? Because Big Wind and Big
Solar Got $22 Billion in Subsidies. For every dollar spent by the
wind and solar sectors in Texas, they got roughly 33 cents from taxpayers. By
any measure, this is an outrageous level of subsidization. And Texans are
learning that the tens of billions of dollars spent on wind and solar are not
translating into reliable electricity.” Commentary at...
Most of the piece discussed a Swiss referendum that
rejected three climate change laws. The Texas comments jumped out to me.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 8:30 PM 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. The
10-dMA of new cases was about 8,000.
That’s a new low and continues the good news of lower cases. The bad
news is that the curve is flattening and we may see this level of cases for a
while.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose
about 1.4% to 4225.
-VIX dropped about 14% to 17.89.
-The yield on the 10-year
Treasury rose to 1.499%.
Today, we had very high,
unchanged-volume. In theory this in an
indication that investors are confused and it can signal a reversal. I’ve tried
to develop an indicator based on this without much success. Sometimes it’s true; sometimes not.
Today was a statistically significant
up-day. That just means that the price-volume move exceeded my statistical
parameters. Data shows that a statistically-significant, up-day is followed by
a down-day about 60% of the time.
The Big losers last week (Energy & Financials) were
big winners today. Goldman Sacks was up 2.5%; XLE was up 4.3%.
The Bollinger Band Squeeze continued today. From
Investopedia: “When Bollinger Bands® are far apart, volatility is high. When
they are close together, it is low. A Squeeze is triggered when volatility
reaches a six-month low and is identified when Bollinger Bands® reach a
six-month minimum distance apart.” -
https://www.investopedia.com/articles/technical/04/030304.asp
A squeeze signals a large breakout
is coming. A Bollinger Squeeze can be bullish or bearish. RSI is Neutral so I’ll
look for clues in other indicators.
The S&P 500 has been nearly flat for 2 months. None
of my Top-Signal indicators are giving warnings; Late-day-action is bullish; On
Balance Volume (OBV) is moving higher after giving a bear signal Friday; the
10-year treasury moved up today. I think the market goes up from here to new
highs, but there are cross currents so I could be wrong.
The daily sum of 20 Indicators improved from -12 to -9 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations dropped from +26 to +7. (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 suggested earlier that the
50-dMA would be the bottom or near the bottom for this pullback. As of today’s
close, the Index is 1% above its 50-dMA
I am leaning bullish. 83% of
volume was up Monday. Another day above 80% would be a very bullish sign.
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 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 25 May, my
stock-allocation is about 50% invested in stocks. I am not super bullish, but I
am not bearish either so 50% is a reasonable allocation for me.
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.
