“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“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.
DURABLE ORDERS (Advisor Perspectives)
“New orders for manufactured durable goods in July
decreased $0.4 billion or 0.1 percent to $257.2 billion, the U.S. Census Bureau
announced today...If we exclude transportation, "core" durable goods
was up 0.7% MoM, which was above the Investing.com consensus of 0.5%. The core
measure is up 16.7% YoY.” Commentary at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 3.0 million barrels from the
previous week. At 432.6 million barrels, U.S. crude oil inventories are about
6% below the five year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
FAILURE IS NOT AN OPTION (NorthmanTrader)
“I’ve stated consistently that the S&P 500 has
devolved into a Fed balance sheet tracker and as long as the liquidity equation
remains in control over the market distortion equation the ghost of
2013 will see this market levitate non stop with perhaps the
occasional dip into the 100MA. Unlike 2013 of course valuations are significant
higher and no dips below the 50MA are allowed so far. The media and market
participants still like to chase the narrative of the day to explain market
moves while really nothing else matters besides the Fed.” – Sven Henrich.
Commentary at...
https://northmantrader.com/2021/08/23/failure-is-not-an-option/
THE FOLLY OF RULING OUT A COLLAPSE (Hussman Funds, 8
August)
“Among all the bubbles in history, including the 1929
bubble, the late-1960’s Go-Go bubble, the early 1970’s Nifty-Fifty mania, the
late-1990’s tech bubble, and the 2007 mortgage bubble that preceded the global
financial crisis, none has so thoroughly nurtured the illusion that extended
losses are impossible than the bubble we find ourselves in today...
...My impression is that the first leg down from recent
market highs may be nearly vertical. Given that current extremes eclipse the
dizziest heights of both 1929 and 2000, I suspect that a 30% down-leg in the
S&P 500 from current extremes wouldn’t even break a sweat....Put simply, I
believe that current risks are unusually pointed, and warrant a rare degree of
seriousness.” – John Hussman, Phd. Commentary at...
https://www.hussmanfunds.com/comment/mc210808/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:00 PM Wednesday. U.S. total case numbers are on the left axis; daily
numbers are on the right side of the graph in Red with the 10-dMA of daily
numbers in Green.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.2% to 4496.
-VIX dipped about 3% to 16.79.
-The yield on the 10-year Treasury rose to 1.349%.
Of course...of course...of course! While I’ve been
counting the trees wondering why the markets were acting so poorly last week, I
completely missed the forest – the FED!
4.3% of issues on the NYSE made new, 52-week,
all-time-highs at today’s new S&P 500 high. That’s an improvement over
yesterday. It remains below average, but not enough to send a bear signal.
The daily sum of 20 Indicators improved from -6 to -4 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations slipped from -68 to -71. (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. Price, Volume, VIX & Sentiment indicators are neutral.
Pullback? What pullback? Why do I bother writing this
when all we have to do is watch the FED?
I’ll get back to a fully
invested position in the next day or 2 unless we see weakness again.
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
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
Market Internals remained 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.
My stock-allocation is about 45%
invested in stocks, slightly below my "normal" 50% allocation. I am neutral at this point and watching the markets and indicators
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.
