“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 (WSJ)
“Retail sales dropped in May as shoppers shifted more of
their spending from goods to services amid business reopenings, supply-chain
disruptions and higher prices. Consumers cut spending
by 1.3% last month...” Story at...
https://www.wsj.com/articles/us-economy-may-2021-retail-sales-11623701250
EMPIRE STATE MANUFACTURING (Reuters)
“The New York Federal Reserve said on Tuesday its
barometer on manufacturing business activity in New York state declined for a
second consecutive month in June. The regional Fed’s “Empire State” index on
current business conditions fell seven points to 17.4...” Story at...
PPI (FOX Business)
“Producer
prices rose in May by the most on record as the reopening of
the U.S. economy from COVID-19 lockdowns
gathered momentum. The producer price index for final demand last month
increased at a 6.6% annual pace...”
Story at...
https://www.foxbusiness.com/economy/producer-price-index-may-2021
INDUSTRIAL PRODUCTION (ABC News)
“Surging output of cars, trucks and auto parts pulled
U.S. factory production up 0.9% in May.”
Story at...
https://abcnews.go.com/US/wireStory/us-industrial-production-08-factory-output-09-78289963
SEASONALITY VS. THE FED (McClellan Financial
Publications)
“Now we see the Fed paralyzed, unable to back away from
continuing QE at a rate of more than $100 billion per month, which is still
more than the rate seen at any time during QE1, 2, or 3. Inflation is
spiking up more than 5% versus a year ago, and the FOMC still thinks that
keeping short term rates at zero is a wise policy. This is obviously
stimulative, which is great if you are a stock investor [but]...don’t have any
doubt about what happens when QE4 ends. We have seen the outcome of that
story before.” Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/seasonality_versus_the_fed/
Although I didn’t include it here, McClellan’s theme was
essentially that the FED will overwhelm seasonality.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:30 PM Tuesday. 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
-Tuesday the S&P 500 dipped
about 0.2% to 4247.
-VIX rose about 4% to 17.02.
-The yield on the 10-year
Treasury was unchanged at 1.498%.
Signals are slipping, but its
hard to take it too seriously since the fed announcement, due tomorrow, is
probably got investors worried.
We still have only 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 dropped from +6 to zero (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations rose from +65 to +61. (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
TUESDAY 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.
