“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
BULL MARKETS AND WHY WE REPEAT OUR MISTAKES (Real
Investment Advice)
“What is most interesting about investor psychology is
that once a new “bull cycle” engages, the “pain” of the
previous “bear cycle” gets forgotten. While a “baby
boomer” vividly remembers the losses incurred in 2000 and 2008, the bull
market eventually displaces “fear” with “greed.” “Generation
Z,” born between 1995 and 2005, was between the ages of 6 and 16 during
the “Financial Crisis.” As a result, that generation is the most
susceptible to inherent behavioral biases as that generation has never
experienced a “bear market” cycle.”...There is a simplistic cycle
worth noting. “Selective Memory =>Over Confidence =>Investment Losses.” Commentary
at...
https://realinvestmentadvice.com/bull-markets-why-we-repeat-our-mistakes/
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:30 PM ET Tuesday. 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
-Tuesday the S&P 500 rose about 1.8% to 4649.
-VIX fell about 8% to 21.01.
-The yield on the 10-year Treasury rose to 1.461%.
The new-high/new-low spread (the difference between
new-highs and new-lows) improved by 3.7 standard deviations today. That’s a bullish reversal-signal, but the short-term
new-high percentage is still falling so I don’t consider this a buy signal yet.
Still, the S&P 500 closed 0.8% above its 50-dMA. That’s
a good sign. I won’t consider reducing stock holdings unless the Index has
remained below its 50-dMA for a few consecutive days. The Smart Money indicator
(late-day-action) is headed up. That is
an indication that the Pros (smart money) are buying this dip. That’s another reason not to reduce stocks
holdings further.
They were selling Utilities (XLU) and the 10-yr bonds
today, more bull signs.
Should we be buying? I haven’t seen any solid buy signals
yet, but investors were obviously more bullish as indicated by price and internals.
Today was a high, up-volume day (>80% up volume). If we get another one tomorrow that would be
a decent sign to “Buy”. I’ll keep an eye out for other bullish signs tomorrow.
The daily sum of 20 Indicators improved from -12 to -10
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from -20 to -30 (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 is bearish; Volume, Price & Sentiment are
Neutral.
I said yesterday that it looks
like we’ll see the Grinch rather than Santa – maybe not. We’ll see.
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained SELL.
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 stock-allocation of 50%. I trade with about 15-20% of the total
portfolio.
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.
