“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.
EIA CRUDE OIL INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 2.1 million barrels from the
previous week. At 439.7 million barrels, U.S. crude oil inventories are about 7%
below the five year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 7:30 PM 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 0.8% to 4359.
-VIX declined about 9% to 17.91.
-The yield on the 10-year Treasury rose to 1.292%.
84% of the volume was up-volume today. That’s back-to-back days with greater than
80% up volume and that’s a good sign. It usually indicates an up-trend. As we
suspected it might, the S&P 500 simply bounced up from its 50-dMA.
Yesterday and today, we saw strong up-moves, higher than the last time the
Index touched its 50-dMA and bounced higher – an air of desperation, FOMO (Fear
of Missing Out), perhaps? We may soon find out how much commitment the bulls
have – can they push the Index to new highs? As the calendar moves into August
and September I get a bit more antsy. A bigger pullback is overdue.
The daily sum of 20 Indicators improved from -10 to -4 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations fell from -74 to -76. (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
remained HOLD. Volume, VIX, Price & Sentiment are neutral.
Looks like the pullback may
have failed to launch; the S&P 500 bounced from its 50-dMA. The FED has
saved us again.
I am cautiously bullish.
I repurchased the Energy ETF
(XLE) at a lower price than I sold it. It is paying a dividend of nearly 5% and
has a very low PE of about 3. It’s not a momentum play at this point, but it
has been very strong over the last 2 days. With inventories below normal levels,
oil prices should remain strong – unless OPEC decides to flood the world with
oil. That is not likely. The expectation
is that OPEC might increase production to, or slightly below, current demand
levels.
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 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.
My stock-allocation is about 50%
invested in stocks. I am not super bullish (or bearish) and I am watching the
markets closely.
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.
