“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.
FED BEIGE BOOK (Federal Reserve)
“The national economy expanded at a moderate pace from
early April to late May, a somewhat faster rate than the prior reporting
period. Several Districts cited the positive effects on the economy of
increased vaccination rates and relaxed social distancing measures, while they
also noted the adverse impacts of supply chain disruptions... Staffing levels
increased at a relatively steady pace, with two-thirds of Districts reporting
modest employment growth over the reporting period and the remainder indicating
employment gains were moderate.... Contacts expected that labor demand will
remain strong, but supply constrained, in the months ahead... On balance,
overall price pressures increased further since the last report.” Full report
at...
https://www.federalreserve.gov/monetarypolicy/beigebook202106.htm
TWO PINS THREATENING BUBBLES (Real Investment Advice)
“If the prices of food, shelter, and other necessities
continue to surge higher without equivalent wage growth, wealth inequality will
worsen. This problem represents a coming dilemma for the Fed.
When the media and politicians take notice, they will
pressure the Fed on their inflation stance. If the Fed is persuaded or
even forced to act, bubbles driven by the latest round of excessive liquidity,
are likely to deflate. Growing wealth inequality may be a needle in search of a
bubble.” Commentary at...
https://realinvestmentadvice.com/two-pins-threatening-multiple-asset-bubbles/
SPECULATORS BET THE FARM ON STOCKS (Felder Report)
“...This sort of extreme crowding, seen in futures,
leveraged ETFs and in money borrowed in brokerage accounts, suggests that any
equity market weakness that may materialize over the next few months could play
catalyst for a serious bout of deleveraging.” Commentary at...
https://thefelderreport.com/2021/06/02/speculators-bet-the-farm-on-stocks/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:15pm Wednesday. 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
-Wednesday the S&P 500 rose
about 0.1% to 4208.
-VIX dipped about 2% to 17.48.
-The yield on the 10-year
Treasury dipped to 1.588%.
I could just repeat yesterday’s summary. Another odd
day...but let’s keep it short. Internals were good and I expect the S&P 500
to continue its melt-up. I would not be surprised to see the Index jump higher
one of these days.
The daily sum of 20 Indicators improved from +4 to +7 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations rose from +8 to +15. (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, Price, VIX, & Sentiment are neutral.
I am bullish until we see more
bearish signs.
I increased stock allocation
in the portfolio to a fully-invested, 50% in stocks, last week. I am not super
bullish, but I am not bearish either so 50% is a more reasonable allocation
than being under-invested.
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
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
Market Internals remained BULLISH 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.
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.
