“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
CPI (CNBC)
“The consumer
price index, which measures the cost of a wide-ranging basket of
goods and services, rose 0.8% for the month, good for a 6.8% pace on a year
over year basis and the fastest rate since June 1982.” Story at...
https://www.cnbc.com/2021/12/10/consumer-price-index-november-2021.html
UNIV OF MICHIGAN CONSUMER SENTIMENT (Morningstar)
“Consumer sentiment in the U.S. posted a small overall
gain in early December, although it was nearly identical to the average reading
in the prior four months, at low levels due to high inflation and the spread of
the Omicron variant weighing on American moods.” Story at...
OMICRON: MORE CONTAGIOUS / LESS DANGEROUS (USA Today)
“Early reports from South Africa seem to
indicate the omicron variant of coronavirus is much more contagious
than previous variants while causing milder disease, though experts there
warn definitive data won't be available for weeks.” Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 8:00 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. I added the smoothed 10-dMA of new cases (in purple) to the chart.
50-million people have been diagnosed with Covid. There were probably another 50-million who
were asymptomatic or had few symptoms. (That’s based on the cruise-ship
experience where there were a large % of cases with no symptoms.). 200-million have been fully vaccinated. That’s
nearly the entire population of the US. I guess some of the vaccinated were
those who had previously been infected. Further, we note that vaccines don’t
protect against mucosal Covid infections, although there were some under
development that would.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1% to 4667.
-VIX fell about 13% to 18.69.
-The yield on the 10-year Treasury dipped to 1.486%.
I noted below in the “Bear Category” that 1.7% of all
issues traded on the NYSE made new, 52-week highs when the S&P 500 made a
new all-time-high, today. That is very
low and is a worrisome bear indicator. It shows the advance is extremely narrow
and concentrated in only a few stocks. I hope that the number of new-highs will
improve going forward. The low new-highs
today may be a holdover from the recent weakness. If not, I’ll be retreating to
a more neutral position in stocks or going defensive again, if warranted by
indicators. I am over invested now
because we have bounced from the recent low.
The Friday run-down of some important indicators turned
to the Bull side (8-bear and 12-bull) and was considerably more bullish than
last Friday’s very bearish numbers. These indicators tend to be both long-term
and short-term, so they are different than the 20 that I report on daily.
Details follow:
BULL SIGNS
-The smoothed advancing volume on the NYSE is rising.
-There have been 6 Statistically-Significant days (big
moves in price-volume) in the last 15-days. This can be a bull or bear. The
last 2 have been up-moves off the bottom – let’s call it bullish.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA % of issues advancing on the NYSE
(Breadth) is above 50%
-MACD of S&P 500 price made a bullish crossover, 10
December.
-My Money Trend indicator is climbing.
-Short-term new-high/new-low data is rising.
-Back-to-back >80% up-volume days cancelled two prior
high, down-volume days and gave a bullish sign on 7 December.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA
are both ABOVE the 20-dEMA.
-The Smart Money (late-day action) is headed up. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-The S&P 500 is out-performing the Utilities
ETF (XLU).
-57% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-The S&P 500 is 8.6% 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.
-Overbought/Oversold Index (Advance/Decline Ratio) is neutral.
-Bollinger Bands are neutral.
-The S&P 500 has had 2 Distribution Days in the last
25-days; Neutral.
-RSI is neutral.
-7 December, the 52-week, New-high/new-low ratio improved
by 3 standard deviations, bullish, but not enough to send a signal.
-Non-crash Sentiment indicator is very bearish, but not
enough to send a bullish signal. (Too bearish is bullish.)
-The Fosback High-Low Logic Index is neutral.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to send a signal.
-The Calm-before-the-Storm Indicator was warning; then there
were 2 Panic Indicators on 26 & 30 November suggesting more downside to
come. – Signal has expired.
-VIX is neutral.
-There were 5 Hindenburg Omen signals 17-24 November. These have been cancelled because the McClellan
Oscillator turned positive. It turned negative again yesterday.
-There have been 11 up-days over the last 20 sessions –
Neutral.
-There have been 6 up-days over the last 10-sessions –
Neutral.
BEAR SIGNS
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is below 50%.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 11 November; it is close to a bullish cross
now.
-Breadth on the NYSE is too low when compared to the
S&P 500 index.
-Long-term new-high/new-low data is falling.
-McClellan Oscillator.
-Slope of the 40-dMA of New-highs is down. This is one of
my favorite trend indicators.
-Cyclical Industrials (XLI-ETF) are under-performing the
S&P 500, but may be reversing. – Bearish for now.
-1.7% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high, today, 10 December. This
is very bearish. (There is no bullish signal for this indicator.)
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 12 bull-signs. Last week, there were 20 bear-signs and
2 bull-signs.
The daily sum of 20 Indicators slipped from zero to -1 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -99 to -87 (The trend is more
important than the actual number for the 10-day value.) These numbers sometimes
change after I post the blog based on data that comes in late. Most of these
indicators are short-term so they tend to bounce around a lot.
The Long Term NTSM indicator
ensemble remained HOLD. VIX, Volume, Price & Sentiment are Neutral.
I am cautiously bullish. We’ll just have to see how long the bullish
trend remains.
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 HOLD.
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 65% invested in stocks; this is above my “normal” fully
invested stock-allocation of 50%. I’ll hold that position until I see first
signs of weakness. The goal here is to use cash for short-term gains and then
return to cash with 50% invested in stocks.
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.
