“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
CONSUMER CONFIDENCE (Conference Board vs. prNewswire)
“The Conference Board Consumer Confidence Index® declined in January, after an
increase in December. The Index now stands at 113.8 (1985=100), down from 115.2
in December... ‘Consumer confidence moderated in January, following gains in
the final three months of 2021,’ said Lynn Franco,
Senior Director of Economic Indicators at The Conference Board. ‘The Present
Situation Index improved, suggesting the economy entered the new year on solid
footing. However, expectations about short-term growth prospects weakened,
pointing to a likely moderation in growth during the first quarter of 2022.
Nevertheless, the proportion of consumers planning to purchase homes,
automobiles, and major appliances over the next six months all increased.’"
Press release at...
https://www.prnewswire.com/news-releases/consumer-confidence-fell-in-january-301467668.html
STOCKS WILL PLUNGE ANOTHER 10% (CNBC)
“According to Morgan Stanley's Mike Wilson, the S&P
500 is vulnerable to a 10% plunge despite Monday's late buying binge. He warns
investors are dangerously downplaying a collision between a tightening Federal
Reserve and slowing growth. ‘This type of action is just not comforting. I
don't think anybody is going home feeling like they've got this thing nailed
even if they bought the lows,’ the firm's chief U.S. equity strategist and
chief investment officer told CNBC's ‘Fast Money.’"
Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:00 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.
If we focus on the box in the above chart we can see
(below) that the 10-dMA of new-cases and the smoothed 10-day has peaked.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell
about 1.2% to 4356.
-VIX rose about 5% to 31.3.
-The yield on the 10-year Treasury rose to 1.776%.
Today’s low on the S&P 500 was 1.2% below yesterday’s
low, while the volume was 11% lower. Market Internals improved handily and the
new-hi/new-low data improved by 6 std-deviations. This is an indication, somewhat
surprisingly, that the Correction is most likely over. This analysis isn’t
always correct. I wish the market had
waited longer before it gave me a buy-signal. The correction is at Day-15 so it
may be a little early, but we could have a retest of the low that would extend
the overall correction time a lot longer.
Most corrections do have a retest, but in recent pullbacks
there haven’t been retests of the lows.
This is a change from past market practice so it’s hard to make a fully
reasoned decision – do we buy now at what appears to be the bottom of the
waterfall or wait for a retest of the low that may not come?
I decided to buy today and increase my stock holdings to
about 45% of the total portfolio. I’ll decide whether to buy more depending on
market action going forward.
Pullback Data
Days since top: 15 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: 9.2%; 12% intraday (Avg.= 13% for
non-crash pullbacks)
The S&P 500 is 1.7% below its 200-dMA.
The daily sum of 20 Indicators improved from -6 to -3
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -56 to -51 (The
trend direction 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 SELL. Volume & Price are bearish; VIX & Sentiment are
Neutral. The important sell-signal was 12 Jan. Today is just a reminder that
conditions remain bearish.
The VIX indicator is one of
the more reliable signals; it is a good sign that the VIX indicator improved to
HOLD today even though the Long Term NTSM indicator ensemble remained SELL.
I was surprised today by the
buy-signal in my market analysis. At this point, I am a cautious Bull. I’ll be
adding considerably more stocks to the portfolio, if we see more positive
market signs.
The FED will announce tomorrow
at 2PM, but I don’t expect a surprise.
It seems to me that the news is pretty well already out there.
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.
Tuesday, I increased my
stock-allocation in the portfolio to about 45% invested in stocks. This is
close to my “normal” fully invested stock-allocation of 50%. I trade about
15-20% of the total portfolio using the momentum-based analysis I provide here.
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.
