“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.
HOUSING STARTS / PERMITS (Reuters)
“U.S. homebuilding increased more than expected in June,
but permits for future home construction fell to an eight-month low, likely
reflecting hesitancy caused by expensive building materials as well as
shortages of labor and land...Housing starts rose 6.3%...” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 8:30 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 rose about 1.5% to 4323.
-VIX declined about 12% to 19.73.
-The yield on the 10-year Treasury rose to 1.227%.
A bearish “Distribution Day” signal is negated by a
Follow Through Day. “A follow-through day occurs during a market correction
when a major index closes significantly higher than the previous day, and in
greater volume. It happens Day 4 or later of an attempted rally. Leading up to
a follow-through day, an attempted rally takes place during a downtrend when a
major index closes with a gain. The rally attempt continues intact as long as
the index doesn't make a new low.” From...
https://education.investors.com/financial-dictionary/ibd-terms/follow--through-day-concept
The Index did not give a Follow Through signal today,
because the volume today was lower than yesterday. At present, we still have 7 distribution days
in the last 3 weeks – a bearish sign.
Today was also a statistically-significant, up-day under
my system which often (about 60% of the time) is followed by a down-day.
On the plus side, Utilities
under-performed the S&P 500 today; the 10-yr Bond interest rate rose; the
VIX fell; all suggesting that investors think the rough patch is over.
The daily sum of 20 Indicators improved from -14 to -10
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations fell from -61 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 Long Term NTSM indicator
remained HOLD. Volume, VIX, Price & Sentiment are neutral.
Looks like the pullback may
have failed to launch. For now, it appears the S&P 500 has bounced from its
50-dMA. The FED has saved us again. I don’t have too much confidence in the
call; small moves give small signals.
I am cautiously bullish. Depending
on the market action in the next day or two, I’ll add to stock holdings to
replace the position in XLE that I sold.
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 improved to 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 15 July, my
stock-allocation is about 45% invested in stocks since I took profits in XLE
due to its falling momentum. I’ll probably put those funds back to work fairly soon. 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.
