“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.
FEWER NDX STOCKS IN THE UPREND (McClellan Financial
Publications)
“Notice that when the final March 2000 top came for the
Nasdaq 100, there was a pretty monstrous divergence between prices and this
indicator...The current divergence now in 2021 is a gentler one, so perhaps not
foretelling great calamity this time, but still saying that the energy of the
advance has been waning, and setting up for a decline of some kind.” – Tom McClellan.
Commentary at...
TECH HOLDING UP THE INDICES (Heritage Capital)
“For now, all of the warning signs I have been discussing
this month remain in place. The stock market is not behaving well, but the
bears have been unable to make any meaningful downside progress... If the mega
tech stocks begin to rollover, that could spell challenges to the indices.
However, I keep hearing the pundit nonsense that investors won’t sell; they
will just rotate to other stocks and prevent the market from correcting. Not
only is that idiotic, but it’s also how larger declines unfold.” – Paul Schatz,
President, Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/tech-holding-up-indices-for-now/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:30 PM Friday. 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
-Friday the S&P 500 rose about 0.8% to 4442.
-VIX fell about 14% to 18.56.
-The yield on the 10-year Treasury rose to 1.261%.
The Friday’s run-down of some important indicators is
very bearish (16-bear and 2-bull) and the numbers are close to what they were
just before the Coronavirus, 34%-correction. These indicators tend to be both
long-term and short-term, so they are somewhat different than the 20 that I
report on daily. Details follow:
BULL SIGNS
-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.
NEUTRAL
-Distribution Days.
There have been 2 in the last 25-days. Neutral.
-Bollinger Bands
-RSI.
-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.
-4.4% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high today, 16 August. (There is
no bullish signal for this indicator.) This is below average, but not low
enough to send a bear signal – something to watch.
-The Fosback High-Low Logic Index is neutral.
-There have been 13 up-days over the last 20 days.
Neutral
-There have been 7 up-days over the last 10-days. Neutral
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to give a signal.
-VIX was sell yesterday, but improved to Neutral Friday.
-Overbought/Oversold Index (Advance/Decline Ratio).
-29 July, the 52-week, New-high/new-low ratio improved by
0.4 standard deviations, somewhat bullish, but neutral.
-There have been 2 Statistically-Significant days in the
last 15-days. This can be a bull or bear signal. 2 is neutral.
-The S&P 500 is 10.6% above its 200-dMA (Bear
indicator is 12%.). This value was 15.9% above the 200-dMA when the 10%
correction occurred in Sep 2020.
BEAR SIGNS
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is below 50%.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is below 50%.
-MACD of S&P 500 price made a bearish crossover, 17
August.
-McClellan Oscillator.
-The S&P 500 is under-performing the Utilities ETF
(XLU).
-Slope of the 40-dMA of New-highs is down. This is one of
my favorite trend indicators.
-Cyclical Industrials (XLI-ETF) have been under-performing
the S&P 500 recently.
-The smoothed advancing volume on the NYSE is falling.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 10 August.
-Breadth on the NYSE compared to the S&P 500 index is
bearish.
-My Money Trend indicator.
-Long-term new-high/new-low data is falling.
-Short-term new-high/new-low data is falling.
-There were 3 Hindenburg Omen signals 16-18 Aug and another
one today. They will remain in effect until
the McClellan Oscillator turns positive.
-The Smart Money (late-day action). (This indicator is
based on the Smart Money Indicator developed by Don Hayes).
-47% of the 15-ETFs that I track have been up over the
last 10-days.
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 16 bear-signs and 2 bull-signs. Last week, there were 7 bear-signs and
11 bull-signs.
Today was a statistically significant up-day. That just means
that the price-volume move exceeded my statistical parameters. Statistics show
that a statistically-significant, up-day is followed by a down-day about 60% of
the time. Given the indicators, this suggests that today was just a dead cat
bounce...we'll see.
The daily sum of 20 Indicators improved from -13 to -10
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations slipped from -48 to -56. (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. The VIX indicator improved. Price, Volume, VIX & Sentiment indicators
are neutral.
Today’s summary of indicators
is very bearish and that suggests more strongly that we’re going to have a
pullback of some kind. In the recent past, the S&P 500 has not broken thru
its 50-dMA. That would imply only a 2% drop from here, not even a correction. I’m
a little more bearish, but I think the drop will probably less than 10% down. As
always, there are no guarantees – Mr. Market doesn’t read my blog.
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
FRIDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained 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 45%
invested in stocks. I am bearish and 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.
