“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.
CPI (FoxBusiness)
“U.S. consumer prices increased in May at the fastest
annual rate in nearly 13 years as the economic comeback
from COVID-19 lockdowns
continues to build momentum. The Labor Department said Thursday that the
consumer price index in May rose 5% year over year...” Story at...
https://www.foxbusiness.com/economy/inflation-consumer-price-index-may-2021
JOBLESS CLAIMS (Reuters)
The number of Americans filing new claims for
unemployment benefits fell last week to the lowest level in nearly 15 months...
Initial claims for state unemployment benefits fell 9,000 to a seasonally
adjusted 376,000 for the week ended June 5.”
Story at...
WARNING SIGNS OF A CORRECTION AHEAD (RIA)
“...it is essential to clarify we
are discussing only the potential for a short-term correction...Daniel
Lacalle recently posted, Morgan
Stanley‘s market timing indicator is at levels that have typically
coincided with market downturns. Just for reference, the current reading is the
most “bearish” on
record... All of the warnings...suggest there is a risk of a correction in the
near term. However, technical analysis does not differentiate between a 5%
pullback, a 10% correction, or a “bear market.” You will only find that
out once it begins, and such is why risk management is essential...I am not implying,
suggesting, or stating that such signals mean going 100% to cash. What
I am suggesting is that when “sell signals” are given, that is the time
when individuals should perform some essential portfolio risk management...”
Commentary at...
https://realinvestmentadvice.com/technically-speaking-warning-signs-a-correction-is-ahead/
FED’S EASY MONEY LULLING INVETSORS (CNBC)
“Billionaire hedge fund pioneer Stanley
Druckenmiller believes the Federal Reserve’s continued easy
money measures have distorted asset prices and lulled investors into a false
sense of security...Markets participants will continue to ignore risks “until
the Fed stops canceling market signals,” the Duquesne Family Office CEO added.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 6 PM 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 0.5% to 4239.
-VIX fell about 10% to 16.1.
-The yield on the 10-year
Treasury dipped to 1.441%.
The S&P 500 made a new
all-time high today. 10% of issues on the NYSE made new 52-week highs and 58%
of issues on the NYSE were up today. Those stats indicate good breadth so a
correction is not suggested. If one were
to occur, it is likely that it would be relatively small, say in the 5-7% range.
Late-day action is looking
very bullish over the last 10-days even though it was down today. That’s a good
sign since this indicator follows the action of the Pros who tend to act late
in the day.
We now have 2 top-signals; (1)
The Index is too far ahead of breadth. (2) The Index is too far ahead of its
200-dMA. These are concerning, but not enough to call a top. Both Bollinger
Bands and RSI are close to overbought (a top indicator), but they are not there
yet.
The daily sum of 20 Indicators dipped from +8 to +4 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations rose from +67 to +62. (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. Price is Bullish; Volume, VIX, & Sentiment are
neutral.
I am bullish until we see more
bearish signs.
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 slipped 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 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.
