“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
FACTORY ORDERS (Reuters)
“New orders for U.S.-made goods accelerated in August,
pointing to sustained strength in manufacturing even as economic growth
appeared to have slowed in the third quarter because of shortages of raw
materials and labor. The Commerce Department said on Monday that factory orders
increased 1.2% in August.” Story at
https://www.reuters.com/world/us/us-factory-orders-increase-strongly-august-2021-10-04/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 9:30 PM Monday. 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.
I added the smoothed 10-dMA of new cases (in purple) to
the chart.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell about 1.3% to 4300.
-VIX rose about 9% to 23.01.
-The yield on the 10-year Treasury was little changed at
1.482%.
Today was a Distribution Day and that makes 6 over the
last 25 sessions. That is a bearish
signal. At Investors.com we see the following:
“A distribution day is a significant decline in the
Nasdaq or S&P 500 in higher volume than was seen in the previous session.
IBD defines a "significant decline" as a drop of more than 0.2%, with
no rounding up. A distribution day indicates unusually heavy selling by institutional
investors, the heavyweights who largely set a market's direction. Four or five
distribution days over several weeks nearly always signal that stocks have
topped and are heading for a downturn.” Definition from...
Today, I didn’t see an indication that the pullback is
over. Volume was down slightly, (compared to the prior low), but internals were
little improved. However, other indicators did turn more bullish.
The daily sum of 20 Indicators improved from -10 to +1 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -56 to -44 (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.
Surprisingly, the Market Internals, Short-Term indicator turned bullish.
The Long Term NTSM indicator
ensemble improved to HOLD. VIX is bearish; Volume, Price & Sentiment
indicators are neutral.
In the final analysis, until I
see more Bull signs, I remain bearish. We’ll just have to wait and see if we
get some more definitive signs.
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 improved to BULLISH 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 in the
portfolio is now about 45% invested in stocks; this is below my “normal” fully
invested allocation of 50%.
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 general rule, some
suggest that the % of portfolio invested in the stock market should be one’s
age subtracted from 100. So, a
30-year-old person would have 70% of the portfolio in stocks, stock mutual
funds and/or stock ETFs. That’s ok, but
for older investors, I usually don’t recommend keeping less than 50% invested
in stocks (as a fully invested position) since most people need some growth in
the portfolio to keep up with inflation.
