“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
FED BEIGE BOOK (Federal Reserve)
“...many Districts indicated growth continued to be constrained
by ongoing supply chain disruptions and labor shortages. Despite the modest
pace of growth, demand for materials and inputs, and demand for workers,
remained elevated among businesses...Most Districts noted a sudden pull back in
leisure travel, hotel occupancy and patronage at restaurants as the number of
new cases rose in recent weeks. Although optimism remained high generally,
several Districts cited reports from businesses that expectations for growth
over the next several months cooled somewhat during the last few weeks.” Report
at...
https://www.federalreserve.gov/monetarypolicy/beigebook202201.htm
CPI (CNBC)
“Inflation plowed ahead at its fastest 12-month pace in
nearly 40 years during December, according to a closely watched gauge the Labor
Department released Wednesday. The consumer price index, a metric that measures
costs across dozens of items, increased 7%...” Story at...
https://www.cnbc.com/2022/01/12/cpi-december-2021-.html
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 413.3 million barrels, U.S. crude oil inventories are about
8% below the five-year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
Chart from...
https://www.eia.gov/todayinenergy/detail.php?id=50858
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:30 PM ET 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 0.3% to 4726
-VIX slipped about 4% to 17.62
-The yield on the 10-year Treasury was down to 1.746%.
Today there was high unchanged volume. Many believe that
this indicator suggests investor confusion at market turning points. Recent
history shows this indicator has indicated a reversal of some kind, either now,
or near future. My problem is that it is frequently a false signal. At this
point if that indicator is sending a decent signal, the direction of reversal
would be down. I’m not convinced, but there weren’t clear signs that the market
weakness is over.
Up-volume was 84% of total volume Tuesday. Up-volume day today was only 61% so we didn’t
get the clear buy signal. 61% isn’t bearish either; there just wasn’t a clue in
volume movements today.
The 50-dMA of breadth (issues advancing on the NYSE) is
still below 50%. This is almost the definition of a pullback.
The S&P 500 closed 1% above its 50-dMA. That level still needs to be watched, but there were some bullish signs.
The 5-10-20 Timer system
turned Bullish today
The daily sum of 20 Indicators improved from -4 to -1
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from -11 to -17 (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 HOLD. Price is Bullish; Volume, VIX & Sentiment are
Neutral.
I haven’t seen a strong signal
that would allow me to say the pullback is over. I am inclined to wait before I decide whether
to buy this dip, although if tomorrow is a strong day I might begin to buy.
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 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 35% 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.
The S&P 500 is still about
1% above its 50-dMA. If that level fails, it will tend to confirm the
downtrend.
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.
