“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.
PERSONAL SPENDING / INCOME (Morningstar)
“Household spending was flat last month as consumers
pulled back on big-ticket goods purchases and spent more on services, in what
has been an uneven recovery from the Covid-19 pandemic. Personal income fell 2%
in May from April...” Story at...
https://www.morningstar.com/news/dow-jones/202106255100/us-personal-spending-flat-in-may-update
PCE PRICES (MarketWatch)
“A key measure of U.S. inflation rose sharply again in
May and showed prices rising at the fastest annual pace since 2008, signaling
consumers can expect to pay more for goods and services over the summer as the
economy recovers from the pandemic. The so-called PCE prices index climbed 0.4%
in May...” Story at...
UNIV OF MICHIGAN SENTIMENT (Univ. of Michigan)
"Consumer sentiment rebounded in June to the
second-highest level since the start of the pandemic, according to the
University of Michigan Surveys of Consumers. All of the June gain was among
households with incomes above $100,000, and mainly in the way they judged the
future economic outlook...” Press release at...
https://news.umich.edu/stronger-economy-anticipated-amid-appreciable-risks/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 8:15 PM 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 0.3% to 4281.
-VIX dropped about 2% to 15.62.
-The yield on the 10-year Treasury
rose to 1.528%.
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 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%.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are
both above the 20-dEMA.
-Statistically, the S&P 500 gave a panic-signal, today,
18 June. This one can be bearish or bullish. Based on recent history, the
50-dMA and the lack of bearish top-indicators at the recent top, I’ll leave
this in the bull category, but I could be wrong.
-The size of up-moves has been larger than the size of
down-moves over the last month.
-The Smart Money (late-day action) is improving. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-MACD of S&P 500 price made a bullish crossover
today, 25 June.
-My Money Trend indicator is headed up.
-The smoothed advancing volume on the NYSE is rising.
-The S&P 500 is out-performing the Utilities ETF
(XLU), and trending higher - bullish.
-54% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-Breadth on the NYSE compared to the S&P 500 index is
neutral.
-We had 3 Distribution Days recently, but not enough to
send a signal.
-RSI – neutral
-VIX is falling, but not fast enough to send a signal -
neutral.
-Non-crash Sentiment indicator remains neutral, but it is
very bullish and that means the signal is leaning bearish. It is close to a bear
signal.
-The Fosback High-Low Logic Index is neutral.
-There have been 5 up-days over the last 10-days.
Neutral.
-There have been 11 up-days over the last 20 days.
Neutral
-Overbought/Oversold Index (Advance/Decline Ratio).
-There have been 3 Statistically-Significant days in the
last 15-days. Neutral.
-The market remains fairly broad; 6.5% of all
issues traded on the NYSE made new, 52-week highs when the S&P 500 made a
new all-time-high 11 June. (There is no bullish signal for this indicator.) This
is slightly below average, but it is close enough to suggest that if we do have
a correction from here it would likely be less than 10%.
-4 June, the 52-week, New-high/new-low ratio improved by 0.4
standard deviations, somewhat bullish, but not enough to give a signal.
-Short-term new-high/new-low data is flat.
-Long-term new-high/new-low data is flat.
BEAR SIGNS
-The 10-dMA of issues advancing on the NYSE
(Breadth) is below 50%
-The most recent Bollinger
Squeeze signal was 2 days ago, 23 June.
A Bollinger Squeeze signals a big move is coming and it can be bullish
or bearish. RSI is neutral, but Bollinger Bands were at the upper band. I’m
going to switch this over to the Bear category.
-The S&P 500 is 12.1% above its 200-dMA (Sell point
is 12%.). This value was 15.9% above the 200-dMA when the 10% correction
occurred in Sep 2020.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 16 June.
-McClellan Oscillator is mildly bearish.
-Slope of the 40-dMA of New-highs is falling. This is one
of my favorite trend indicators so this is worrisome, but it could be just reflecting last week's weakness.
-Cyclical Industrials (XLI-ETF) are under-performing the
S&P 500 - bearish.
-Bollinger Bands are a whisker away from overbought (a bearish
sign).
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 11 bull-signs. Last week, there were 11 bear-signs and 7
bull-signs.
Markets have improved this
week so it is not a surprise to see indicators improve too. Still,
there are enough bear signs from reliable indicators that should give pause to bullish investors.
The daily sum of 20 Indicators improved from +1 to +2 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations dropped from -30 to -34. (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, but remained HOLD. Price was bullish; Volume, VIX & Sentiment are
neutral.
There is currently only 1
top-indicator is warning of a top; the Index is stretched too far ahead of its
200-dMA.
I am cautiously bullish.
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
Financials (XLF) have fallen
out of the top 3 ETFs in momentum. It was
the big winner today so it may be worth holding a bit longer.
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 remained 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.
