“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“This is something that folks don’t like to talk about,
but black-on-black crime does exist, and sadly, in vulnerable communities it’s
more common that violent crimes are perpetrated more times by persons of color
against persons of color.” Radical critics of law enforcement fail to
understand that “people in any city in America who live in vulnerable
communities absolutely rely and want the police. They want constitutional
policing. But they want to be safe...Some affiliated with Black Lives Matter
may not even understand maybe some of the Marxist underpinnings of the
leadership...It’s a movement made to undermine our government as we know it,
and in some places you were more successful than others.” - James Craig,
recently retired Chief of Police, City of Detroit. (See “The Man who Kept the
Peace in Detroit”, WSJ at...
https://www.wsj.com/articles/the-man-who-kept-the-peace-in-detroit-11625854992)
BOND YIELDS SEND AN ECONOMIC WARNING (RIA)
“Bond yields are sending an economic warning as
this past week 10-year Treasury yields dropped back to 1.3%. With the
simultaneous surge in the dollar, there is rising evidence the economic “reflation” trade is getting
unwound.
Such is despite overly exuberant expectations of strong
economic growth by the mainstream media.” Commentary at...
https://realinvestmentadvice.com/macroview-bond-yields-send-an-economic-warning/
REGRESSION TO TREND: LONG TERM MARKET PERFORMANCE
(Advisor Perspectives)
“Below is a chart of the S&P Composite stretching
back to 1871 based on the real (inflation-adjusted) monthly average of daily
closes. We're using a semi-log scale to equalize vertical distances for the
same percentage change regardless of the index price range...
... The peak in 2000 marked an unprecedented 129%
overshooting of the trend — substantially above the overshoot in 1929. The
index had been above trend for two decades, with one exception: it dipped about
15% below trend briefly in March of 2009. At the beginning of July 2021, it is 170% above trend.
The major troughs of the past saw declines in excess of 50% below the trend. If
the current S&P 500 were sitting squarely on the regression, it would be at
the 1567 level.” Commentary/analysis at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:00 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.
Monday’s new-case numbers were double the 10-day moving
average from just 6 days ago. I don’t see this as a disaster, yet, but we
better watch this stat. I continue to be surprised at the relatively large
number of people who have refused the vaccine.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.4% to 4385.
-VIX rose about 1% to 16.38.
-The yield on the 10-year Treasury rose to 1.365%.
I mentioned Friday that volume was very low. Today, Volume was about 6% below the monthly
average. That’s not much and it means
that, for now, we don’t need to worry about low volume.
The daily sum of 20 Indicators declined from -3 to -6 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations slipped from +6 to -2. (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.
When I updated Friday’s
numbers (Friday evening), the Long-Term indicator was HOLD at Friday’s close, not
BUY as I reported Friday. Monday, the Long Term NTSM indicator remained HOLD. VIX
is bullish; Volume, Price & Sentiment are neutral.
There are currently 2
top-indicators warning of a top: (1) the index is stretched too far above its
200-dMA (2) RSI is overbought.
Bollinger Bands are close to overbought, but are not there
yet. 8 out of the last 10 sessions have been up. That’s close to a bearish sign, but it would
take a lot more consecutive up-days to trip this indicator to the bear side.
6.4% of all issues traded on the NYSE made new,
52-week highs when the S&P 500 made a new all-time-high today, 12 July. This is a little below average, but not enough to worry about.
I remain 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
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
I added American Express (AXP)
and Microsoft (MSFT) last week. My trading positions also currently include XLK (Technology ETF), Boeing (BA), XLE (Energy ETF)
MONDAY 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 and I
am watching the markets closely. For now, 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.
