“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
I don't like picking on the President, but
really...he cancelled oil leases; stopped the Keystone Pipeline; and then asked
OPEC and Russia to increase oil production because gasoline prices are up? Come
on man!
He recently reversed direction on the oil leases and the
US issued its largest auction for new oil leases in the history of the US – I
guess getting reelected is more important than saving the world. -
FED BEIGE BOOK (Fox Business)
“Supply chain bottlenecks and a worsening labor shortage
threatened to undermine the U.S. economic recovery from the coronavirus pandemic
this fall, according to a new Federal Reserve report...the Fed reported that
while economic activity increased at a "modest to moderate pace" in
most of its 12 districts during the October through November period that the
report covers, growth was hindered by severe disruptions in the global supply
chain and a lack of available workers.” Story at...
ADP EMPLOYMENT CHANGE (ADP via PR Newswire)
“Private sector employment increased by 534,000 jobs from
October to November according to the November ADP® National Employment
ReportTM...’The labor market recovery continued to power through its challenges
last month," said Nela Richardson, chief
economist, ADP. "November's job gains bring the three month average
to 543,000 monthly jobs added, a modest uptick from the job pace earlier this
year. Job gains have eclipsed 15 million since the recovery began, though 5
million jobs short of pre-pandemic levels. Service providers, which are more
vulnerable to the pandemic, have dominated job gains this year.’” Press release
at...
ISM MANUFACTURING (ISM via PR Newswire)
“Economic activity in the manufacturing sector grew
in November, with the overall economy achieving an 18th
consecutive month of growth, say the nation's supply executives in the
latest Manufacturing ISM® Report On Business®..."The
November Manufacturing PMI® registered 61.1 percent, an increase of
0.3 percentage point from the October reading of 60.8 percent. This figure
indicates expansion in the overall economy for the 18th month in a row after a
contraction in April 2020.” Press release at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 0.9 million barrels from the
previous week. At 433.1 million barrels, U.S. crude oil inventories are about
6% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
as of 6:00 PM Wednesday. 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
-Wednesday the S&P 500 fell about 1.2% to 4513.
-VIX jumped about 14% to 31.12.
-The yield on the 10-year Treasury dropped to 1.408%.
I caught Cramer on CNBC around mid-day as the S&P 500
was peaking. He was bad mouthing the bears and declaring what a gift it was to
buy the lows Friday. I wonder if he
feels as confident now? The S&P 500 lost more than 125 points (2%+) after
his comments. If you are looking for a bad reversal day, it doesn’t get much
worse than today.
Today, we got lower volume on the NYSE (indicating
reduced selling), but internals were little improved so today didn’t look like
a bottom to me. The reversal in price was bearish, too.
The S&P 500 closed 0.6% below its 50-dMA. That break
of the 50-day is likely to bring more selling. The index is down 4.1% below its
recent all-time high.
Like yesterday, Bollinger
Bands are oversold. I use this indicator
with RSI. RSI is not yet oversold and Bollinger Bands alone don’t mean much. There
are no other Bottom Indicators that are bullish.
Today was another statistically significant down-day.
That just means that the price-volume move exceeded my statistical parameters.
Statistics show that a statistically-significant, down-day is followed by an
up-day about 60% of the time.
The daily sum of 20 Indicators remained -17 (a positive
number is bullish; negatives are bearish); the 10-day smoothed sum that smooths
the daily fluctuations declined from -99 to -113 (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 SELL. Price, VIX & Volume are bearish. Sentiment is Neutral.
I’ll be working to identify a
buying point. The average correction
lasts about a month for corrections less than 10%. I still suspect that this
pullback is inflation/FED related rather than Omicron-Covid, but this morning’s
bull move seemed to suggest it was all about Omicron. Either way, I don’t
expect a quick resolution, but I have been wrong before.
The Index is 5% above its
200-dMA and that is a likely end for this decline.
I remain bearish.
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
WEDNESDAY 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.
I’ll be a buyer when we can
see an end to the current weakness.
My stock-allocation in the
portfolio is now about 35% invested in stocks; this is well below my “normal”
fully invested stock-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.
