“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.
“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.
IHS MARKIT SERVICES PMI (Markit Economics)
“June PMI™ data indicated a further marked upturn in
business activity across the U.S. service sector, supported by a substantial
rise in client demand. Business confidence in the outlook also improved to the
second-highest in seven years.” Press release at...
https://www.markiteconomics.com/Public/Home/PressRelease/cf907366306e4d8aa6b726a97d885634
ISM NON-MANUFACTURING INDEX (Reuters)
“The Institute for Supply Management said on Tuesday its
non-manufacturing activity index fell to 60.1 last month from 64.0 in May,
which was the highest reading in the series’ history...The economy has been hit
by shortages of labor and raw materials as it reopens after more than a year of
disruptions caused by the COVID-19 pandemic.” Story at...
WITNESS BOMBSHELL AT HOUSE HEARING – 100 TIMES LEVERAGE
ON CRYPTO (Wall Street on Parade)
“If hedge funds get farther into crypto, they don’t care
about direction. They’ll go long, they’ll go short. They can use leverage.
There are lots of cryptocurrency exchanges like FTX and Binance and many others
that allow people to use insane amounts of leverage – 100 times to 1…So what
happens if a huge number of hedge funds have prime broker relationships with
too-big-to-fail banks [and] all happen to be in similar crypto positions,
whether it’s long or short and there’s massive volatility in the market. They
may have to sell some of their other assets. It may lead to margin calls in
their non-crypto assets which could lead to forced liquidations and sort of
redound to the banks themselves in the form of counterparty risk.” - Alexis
Goldstein, Wall Street Veteran and Director of Financial Policy at the Open
Markets Institute... Not to put too fine a point on it but counterparty risk is
what led to the financial contagion that crashed Wall Street in 2008.” Story
at...
YES, TRUMP REALLY DID LOSE MICHIGAN (WSJ)
“Donald Trump says
fraud is the only reason he lost the 2020 election. Some even think Mr. Trump
will be reinstated once the truth comes out. Anyone who finds this narrative at
all appealing should take 30 minutes to read the investigative report posted
last week by Michigan Republicans.” Editorial commentary at...
https://www.wsj.com/articles/yes-trump-really-did-lose-michigan-11625265004
Read the Michigan GOP report here...
Bottom line from the report: “This Committee found no
evidence of widespread or systematic fraud in Michigan’s prosecution of the
2020 election.” - Senator Edward McBroom – Chair; Senator Lana Theis – Majority
Vice Chair; Senator Jeff Irwin – Minority Vice Chair; Senator John Bizon.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 7:30 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 4344.
-VIX increased about 9% to 15.07.
-The yield on the 10-year Treasury slipped to 1.351%.
The daily sum of 20 Indicators dipped from +5 to +3 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -10 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.
The Long Term NTSM indicator
ensemble remained HOLD. Volume is bullish; Price, VIX & Sentiment are
neutral.
There is currently only 1
top-indicator warning of a top; the Index is stretched too far ahead of its
200-dMA, but just barely.
I didn’t make any changes yet,
but I’ll add Technology (XLK-ETF) and possibly American Express (AXP). I think
Financials (XLF-ETF) are a sell. They have dropped out of the top 3 ETFs. Nike
is showing strong momentum, but that’s partly related to a big move they had on
their earnings announcement. Hard to say
if that momo will continue.
I’m waiting to be sure Tuesday's weakness isn’t
the start of a more serious pullback.
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 slipped 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 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.
