“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.
Discussing Democratic spending proposals: "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.
NEW HOME SALES (Reuters)
“Sales of new U.S. single-family homes tumbled to a
14-month low in June and sales in the prior month were weaker than initially
estimated, suggesting that expensive building materials and the resulting surge
in prices for properties were restraining the housing market... The report
followed in the wake of news last week that building permits fell to a
nine-month low in June...” Story at...
https://www.reuters.com/business/us-new-home-sales-fall-sharply-june-2021-07-26/
EARNINGS SEASON (FactSet)
“Overall, 24% of the companies in the S&P 500 have
reported actual results for Q2 2021 to date. Of these companies, 88% have
reported actual EPS above estimates, which is above the five-year average of
75%. If 88% is the final percentage for the quarter, it will mark the highest
percentage of S&P 500 companies reporting a positive EPS surprise since
FactSet began tracking this metric in 2008. In aggregate, companies are reporting earnings that are
19.0% above estimates, which is also above the five-year average of 7.8%. If
19.0% is the final percentage for the quarter, it will mark the fourth-largest
earnings surprise percentage reported by the index since FactSet began tracking
this metric in 2008.” Commentary and analysis at...
https://insight.factset.com/sp-500-earnings-season-update-july-23-2021
7 CONSECUTVE NEW HIGHS ARE GOOD NEWS FOR THE MARKETS
(Ciovacco Capital Mgt)
On 7 July, the S&P 500 made its 7th
consecutive new high. The following
chart shows that in the past, that has resulted in good news for the
markets. On the left, the chart shows
the 1-year gain in green for the 9-times that the Index made 7 consecutive
new-highs going back to 1955. Using this data with current conditions, an
approximate S&P 500 target around 4800 is possible over the next year.
Chris Ciovacco stresses this isn’t a prediction – it just shows that we should
keep an open mind to better than expected returns.
Chart by Ciovacco Capital Management. Video presentation
at...
https://www.youtube.com/watch?v=F9UP4qm-RC4
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 7:30 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.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.2% to 4422.
-VIX rose about 2% to 17.58.
-The yield on the 10-year Treasury rose to 1.297%.
New-high, new-low data continues to look more bearish;
New-highs are falling, new-lows are rising. Bollinger Bands are almost
overbought. Only 46% of issues on the NYSE have been up over the last 2 weeks.
The S&P 500 is still too far ahead of NYSE breadth...
...The S&P 500 is 12.8% above its 200-dMA (Sell point
is 12%.). This value was 15.9% above the 200-dMA when the 10% correction
occurred in Sep 2020.
On the Bull side the Pros have been buying in the
late-day action. We have only 3 top indicators, not enough to call a top. Most
of the bull signs from Friday remain, too.
The daily sum of 20 Indicators remained -5 (a positive
number is bullish; negatives are bearish); the 10-day smoothed sum that smooths
the daily fluctuations improved from -74 to -73. (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 a pullback is coming
soon, but there is no confirmation yet.
I remain cautiously bullish until I see some more evidence.
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
MONDAY MARKET INTERNALS (NYSE
DATA)
Market Internals declined to 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.
