“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.
STOCK MARKET ACTING LIKE WE HAVE A 2ND TERM
PRESIDENT
“...the SP500 is acting much more like the 2nd term
president plot, even though we have a first term president (Biden) from a
different party than the last president (Trump)...If the market was going to
follow the normal 1st term president plot, then we should have seen a top in
May and a summer downturn, but we are not seeing that...If the SP500 continues
to follow the 2nd term Presidential Cycle Pattern, then a top lies just ahead,
followed by the normal seasonal weakness into autumn. And the 1st term
PCP also shows a top just ahead, albeit more into early August than in
mid-July, which is not a great distinction.” Commentary at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 11:00 PM Friday. 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.
Daily case numbers keep rising. Does this justify a major
correction? Probably not.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.1% to 4370.
-VIX dropped about 15% to 16.18.
-The yield on the 10-year Treasury rose to 1.360%.
Here’s Friday’s run-down of some important indicators.
These tend to be both long-term and short-term, so they are somewhat different
than the 20 that I report on daily.
BULL SIGNS
-The 10-dMA of issues advancing on the NYSE
(Breadth) is above 50%
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA of the % of issues advancing on the
NYSE (Breadth) is above 50%.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are
both above the 20-dEMA.
-MACD of S&P 500 price made a bullish crossover
today, 25 June.
-VIX is falling fast (finally).
-The Smart Money (late-day action) is improving. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-Slope of the 40-dMA of New-highs is rising. This is one
of my favorite trend indicators.
-The S&P 500 is out-performing the Utilities ETF
(XLU), and trending higher - bullish.
-58% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-Bollinger Bands are nearly overbought, but remain neutral.
-Long-term new-high/new-low data is flat.
-Breadth on the NYSE compared to the S&P 500 index is
neutral.
-We’ve had 4 Distribution Days recently, but not enough
to send a signal.
-Statistically, the S&P 500 gave a panic-signal, 18
June, but the signal has expired.
-Non-crash Sentiment indicator remains neutral, but it is
very bullish and that means the signal is leaning bearish.
-There have been 13 up-days over the last 20 days.
Neutral
-There have been 8 up-days over the last 10-days.
-The Fosback High-Low Logic Index is neutral.
-There have been 4 Statistically-Significant days in the
last 15-days. Neutral.
- 4.6% of all issues traded on the NYSE made new,
52-week highs when the S&P 500 made a new all-time-high 11 June 9 July. (There is
no bullish signal for this indicator.) This is below average, but not enough to send a signal.
-4 June, the 52-week, New-high/new-low ratio improved by 0.4
standard deviations, somewhat bullish, but it has expired.
-The size of up-moves has been larger than the size of
down-moves over the last month, but not enough to give a signal.
-Overbought/Oversold Index (Advance/Decline Ratio) is neutral.
BEAR SIGNS
-MACD of the percentage of issues advancing on the NYSE (breadth)
made a bearish crossover 16 June, and has not yet changed its mind.
-Short-term new-high/new-low data is lower.
-RSI is overbought.
-The S&P 500 is 13.1% 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.
-McClellan Oscillator is mildly bearish.
-Cyclical Industrials (XLI-ETF) are under-performing the
S&P 500 - bearish.
-My Money Trend indicator is slightly to the bear side.
-The smoothed advancing volume on the NYSE is falling.
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 8
bear-signs and 10 bull-signs. Last week, there were 7 bear-signs and 13 bull-signs.
Indicators slipped a little this week, but not too much.
The daily sum of 20 Indicators improved from -6 to -2 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations slipped from +10 to +7. (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.
My Short-Term indicator ensemble improved to Neutral, but
there was a troubling sign today – volume was about 17% below the average over
the last month of trading. This suggests some investor caution. I worry about running out of buyers. Are we there
yet? I don’t really know; but probably not.
The Long Term NTSM indicator improved
to BUY. Volume & VIX are bullish; Price & Sentiment are neutral. This Buy
signal is not important since I have been fully invested for a long time. It is
signaling good market conditions; it can give a bullish signal after a bottom or at, or approaching, a top.
There are currently 2
top-indicators warning of a top: (1) the index is stretched too far above its
200-dMA (2) RSI is overbought. This is a neutral indication.
I remain 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
I added American Express (AXP)
and Microsoft (MSFT) today.
FRIDAY 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 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.
