“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.
PCE PRICES (MarketWatch)
“The rate of inflation in the U.S. rose again in July and
drove the increase over the past year to a 30-year high, pointing to fresh
strains on businesses and consumers as the economy recovers from the
pandemic...The rate of inflation in the 12 months ended in July edged up to
4.2% from 4% — the highest rate since the first Gulf War in 1991.” Story at...
PERSONAL SPENDING (YahooFinance)
"U.S. consumer spending slowed in July as a decline in
motor vehicle purchases due to shortages offset a rise in outlays on services,
supporting views that economic growth will moderate in the third quarter amid a
resurgence in COVID-19 infections.” Story at...
https://finance.yahoo.com/news/u-consumer-spending-slows-july-124136205.html
UNIV OF MICHIGAN SENTIMENT (Univ of Michigan)
“There was no lessening in late August in the extent of
the collapse in consumer sentiment recorded in the first half of the month. The
Consumer Sentiment Index fell by 13.4% from July, recording the least favorable
economic prospects in more than a decade. The Sentiment Index has only recorded
larger losses in six other monthly surveys since 1978. The losses were
especially large in the Expectations Index, and widespread across all
demographic groups, regions, and the outlook for the economy.” Story at...
HAVING COVID PROVIDES BETTER IMMUNITY THAN THE VACCINE
(Science Magazine)
“The natural immune protection that develops after a
SARS-CoV-2 infection offers considerably more of a shield against the Delta
variant of the pandemic coronavirus than two doses of the Pfizer-BioNTech
vaccine, according to a large Israeli study that some scientists wish came with
a “Don’t try this at home” label...The researchers also found that people who
had SARS-CoV-2 previously and then received one dose of the Pfizer-BioNTech
messenger RNA (mRNA) vaccine were more highly protected against reinfection
than those who once had the virus and were still unvaccinated. ” Story at...
My cmt: Of course this news is meaningless for most of
us. Not getting the disease at all is best and the vaccine offers the best
chance for that outcome.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 9:30 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.
New cases more than doubled today and resulted in the
highest daily count in the entire pandemic.
I checked the number a couple of times to be sure I didn’t have a
typo. It may be partially due to Friday “catch-up”
reporting around the country. On the
other hand, it shows the Delta-variant wave may not be ending soon as some had predicted.
It still could be a typo at the Johns
Hopkins website – we’ll see.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.9% to 4409.
-VIX fell about 13% to 16.39.
-The yield on the 10-year Treasury slipped to 1.314%.
The Friday’s run-down of some important indicators has
flipped to the Bull side (7-bear and 10-bull) – a good sign for the bulls.
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 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, 25
August.
-McClellan Oscillator.
-The smoothed advancing volume on the NYSE is rising.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 27 August.
-Short-term new-high/new-low data is rising.
-My Money Trend indicator.
-53% of the 15-ETFs that I track have been up over the
last 10-days.
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.
-The Fosback High-Low Logic Index is neutral.
-VIX.
-Overbought/Oversold Index (Advance/Decline Ratio).
-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.
-29 July, the 52-week, New-high/new-low ratio improved by
0.4 standard deviations, somewhat bullish, but neutral.
-There have been 3 Statistically-Significant days in the
last 15-days. This can be a bull or bear signal. 3 is neutral.
-The S&P 500 is 11.6% 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.
-There were 5 Hindenburg Omen signals 16-23 Aug. The McClellan Oscillator turned positive so
the Omens have been cancelled.
-5% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high today, 27 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.
-There have been 14 up-days over the last 20 days.
Neutral
-There have been 7 up-days over the last 10-days. Neutral
BEAR SIGNS
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is below 50%.
-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.
-Breadth on the NYSE compared to the S&P 500 index is
bearish.
-Long-term new-high/new-low data is falling.
-The S&P 500 is under-performing the Utilities ETF (XLU).
-The Smart Money (late-day action) indicates the Pros are
selling. (This indicator is based on the Smart Money Indicator developed by Don
Hayes).
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
7 bear-signs and 10 bull-signs. Last week, there were 16 bear-signs and 2
bull-signs.
The daily sum of 20 Indicators improved from -8 to zero
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum that
smooths the daily fluctuations improved from -75 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.
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.
Statistically-significant, up-days almost always coincide with tops, but
not all statistically-significant, up-days occur at tops. Today could be a top,
but there are only 3 top indicators warning and that is not a strong top
signal.
Indicators have improved, I’ll bump my stock allocation back to 50% on Monday.
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
THURSDAY 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.
My stock-allocation is about 45%
invested in stocks, slightly below my “normal” 50% allocation. I’ll be
increasing my stock holdings to 50% Monday.
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.
