“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.
"If I was Darth Vader and I wanted to destroy the US
economy, I would do aggressive spending in the middle of an already hot
economy...This is the biggest bubble I've seen in my career." - Stanley
Druckenmiller, billionaire investor.
“Inflation is not going to be transitory,
I’ve been pretty certain in my mind about three prior calls. This is the fourth
one.” - Mohamed El-Erian, Chief economic adviser at Allianz SE
DURABLE ORDERS (CNBC)
“New orders for key U.S.-made capital goods increased
solidly in June despite supply constraints hampering production at some
factories, suggesting business spending on equipment could remain strong beyond
the second quarter. Orders for non-defense capital goods excluding aircraft, a
closely watched proxy for business spending plans, rose 0.5% last month...”
Story at...
https://www.cnbc.com/2021/07/27/us-core-capital-goods-orders-rise-solidly-in-june.html
CONSUMER CONFIDENCE
(Conference Board via prnewswire)
“The Conference Board Consumer Confidence Index® was relatively unchanged in
July, following gains in each of the prior five months. The Index now stands at
129.1 (1985=100), up from 128.9 in June..."Consumer confidence was flat in
July but remains at its highest level since February
2020 (132.6)," said Lynn Franco,
Senior Director of Economic Indicators at The Conference Board.
"Consumers' appraisal of present-day conditions held steady, suggesting
economic growth in Q3 is off to a strong start.” Press release at...
THE NEXT MINSKY MOMENT (Real Investement Advice)
“... interest rates are warning that “something is
not quite right” in the financial system. Previously, when rates have
risen from lows and peaked, such has preceded periods of “market
instability.”
Will this time be different? Maybe. But history suggests
it won’t be.” – Lance Roberts. Commentary at...
https://realinvestmentadvice.com/technically-speaking-the-markets-next-minsky-moment/
GLOBAL WARMING?
Oh wait...the records are from 1936. From NWS:
“The "Dust Bowl" years of 1930-36 brought some
of the hottest summers on record to the United States, especially across the
Plains, Upper Midwest and Great Lake States. For the Upper Mississippi River
Valley, the first few weeks of July 1936 provided the hottest temperatures of
that period, including many all-time record highs...The string of hot, dry days
was also deadly. Nationally, around 5000 deaths were associated with the heat
wave.” From...
https://www.weather.gov/arx/heat_jul36
My cmt: Heat waves happen.
A Warming climate may increase the base starting point by a couple of
degrees, but to say that a heat wave is “caused” by Global Warming is a lie
promulgated by the GW Alarmists.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 6:00 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 dropped about 0.5% to 4401.
-VIX rose about 10% to 19.36.
-The yield on the 10-year Treasury slipped to 1.247%.
The CDC changed guidance and now recommends that vaccinated
persons wear masks indoors in areas where Covid cases are rising. I think that it is rising everywhere, not
just in the non-believer states. The stated reason for the change was that vaccinated
people can still transmit the disease. Presumably, those people are carrying
mild cases of Covid. Sounds like the
golfer John Rahm would be an example. He has now tested positive 3 times for
Covid causing him to miss a major tournament earlier this year and the Olympics recently,
even though he was vaccinated before he tested positive the first time. That is
a major worry and may well impact the stock market.
That might explain market action today. Beating expectations (good news) was not rewarded. Microsoft was the poster child for that result .Microsoft (MSFT) reported today and beat estimates for both the top and bottom line (revenue and earnings), but declined in after-hours trading.
The daily sum of 20 Indicators dropped from -5 to -7 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations declined from -73 to -74. (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 Short-term, market-internals ensemble remained Bearish
suggesting a downtrend.
The Long Term NTSM indicator
remained HOLD. Volume, VIX, Price & Sentiment are neutral.
The S&P 500 dropped to its
50-dMA on 19 July; raced to its upper trendline in 4 days; and now is showing
weakness and may trade back to its lower-trendline. That would be a surprise,
but I have been surprised before.
I am concerned but 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
Microsoft (MSFT) reported
today and beat both the top and bottom line (revenue and earnings), but declined
in after-hours trading. I didn’t see why.
TUESDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained Bearish 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.
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.
