“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
FOMC RATE DECISION (CNBC)
“The Federal Reserve provided multiple indications
Wednesday that its run of ultra-easy policy since the beginning of the Covid
pandemic is coming to a close, making aggressive policy moves in response to
rising inflation...After that wraps up [Bond buying], in late winter or early spring, the
central bank expects to start raising interest rates, which were held steady at
this week’s meeting.” Story at...
RETAIL SALES (WSJ)
“Retail sales rose modestly at the start of the holiday
season, as shoppers faced rising inflation and supply shortages, and some
snapped up gifts earlier. Sales at U.S. retail stores, online sellers, and
restaurants rose by a
seasonally-adjusted 0.3% in November from the previous
month...Broadly consumer demand is strong, and well above last year’s levels.
Retail sales rose 18.2% in November from a year earlier...” Story at...
https://www.wsj.com/articles/us-economy-november-2021-retail-sales-11639498894
EMPIRE STATE MANUFACTURING (Advisor Perspectives)
“Business activity continued to grow strongly in New York
State, according to firms responding to the December 2021 Empire State Manufacturing
Survey. The headline general business conditions index held steady
at 31.9. “ Commentary and charts at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 4.6 million barrels from the
previous week. At 428.3 million barrels, U.S. crude oil inventories are about
7% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
ANALYSTS PREDICT 2022 WILL CLOSE ABOVE 5200 (Factset)
“Industry analysts in aggregate predict the S&P 500
will have a closing price of 5,225.00 in 12 months. This bottom-up target price
for the index is calculated by aggregating the median target price estimates
(based on the company-level target prices submitted by industry analysts) for
all the companies in the index. On December 9, the bottom-up target price for
the S&P 500 was 5,225.00, which was 11.9% above the closing price of
4,667.45.” Report at...
https://insight.factset.com/industry-analysts-predict-the-sp-500-will-close-above-5200-in-2022
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:30 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 rose about 1.6% to 4710, 2 pts
from the prior highs (close enough to call another high).
-VIX fell about 12% to 19.29.
-The yield on the 10-year Treasury rose to 1.457%.
Today, the S&P 500 jumped 100 points after the Fed
meeting from its low to nearly a new-high. As I suspected (but we can’t really
know) the market angst recently has, apparently, been all about the Fed. I say apparently, because there were odd
market internals today. Volumes were to the upside, but not by much. There were
nearly 2 to 1 advancing stocks vs declining, about what we’d expect for a big
move like today. The weirdness is in the new-high/new-low numbers. There were
230 new-lows, 53 more new-lows than yesterday.
New-highs were weak too, as the Index nearly made another all-time high.
The advance remains too narrow! Let’s see if these numbers correct as we go
forward.
We’ve also had 3 consecutive days with the % of issues
advancing over the last 50-days below 50%. Let’s hope that stat improves in a
hurry. That is nearly the definition of a correction.
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 were only 2 top indicators warning and that is not strong enough to give
a top warning.
Today, the daily sum of 20 Indicators improved from -3 to
+2 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from -64 to -45 (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 remained bearish; Volume is bullish; Price & Sentiment
are Neutral.
I am back to a cautious bull,
but I still see a some worrying bear signs that I hope will resolve
this week.
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 improved to BUY.
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 50% invested in stocks; this is above my “normal” fully
invested stock-allocation of 50%. As it turned out, I made about 0.5% on my short-term
investment when I cut from 65% in stocks to 50%, even with the weakness this
week. That’s because my sell order wasn’t filled until the close today. That’s
the way my IRA works.
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.
