“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
GDP (Yahoo Finance)
“U.S. gross domestic product (GDP) ramped up in the final
months of 2021, with still-solid consumer spending helping stoke growth and
offset early negative impacts from the Omicron variant's spread...GDP quarter-over-quarter, annualized: 6.9%
vs. 5.5% expected, 2.3% in Q3...” Story at...
https://finance.yahoo.com/news/q4-gdp-us-economic-activity-recovery-192945002.html
DURABLE ORDERS (Bloomberg)
“Orders placed with U.S. factories for durable goods fell
in December for the first time in three months, pointing to a pause in capital
investment at the close of the fourth quarter. Bookings for all durable goods
-- or items meant to last at least three years -- dropped 0.9% from November,
reflecting a drop in orders for commercial aircraft and communications
equipment.” Story at...
JOBLESS CLAIMS (YahooFinance)
“First-time unemployment filings ticked lower for the
first time in four weeks after notching a
three-month high in the previous reading, suggesting some of the
Omicron-related disruptions that have recently weighed on the labor market's
recovery may be easing... Initial
jobless claims, week ended Jan. 22: 260,000 vs. 265,000
expected...” Story at
https://finance.yahoo.com/news/weekly-unemployment-claims-week-ended-jan-22-2022-215506502.html
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 7:30 PM ET Thursday. 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 , but is not falling very quickly.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell
about 0.5% to 4327.
-VIX dipped about 5% to 30.49.
-The yield on the 10-year Treasury was 1.815%.
Stocks were weak in the afternoon although one wonders if
they’ve found some support in the 4325 region.
While Tuesday’s numbers looked really good (lower volumes
and improvements everywhere) the market apparently does not agree. Internals have deteriorated since then and Thursday
was no exception. New-high/new-low data is getting much worse and other
internals deteriorated, too. Still, the S&P 500 is only about 0.6% below
Tuesday’s close so it is still possible (though less likely) that Tuesday will
turn out to be near the low.
Investors didn’t like Intel’s quarterly results yesterday.
Stephanie Link, CNBC commentator, described Intel as a “value trap” and said don’t
go anywhere near this stock.
On the other hand, Microsoft is still holding on pretty
well. MSFT was up 1% today.
Apple (AAPL) beat expectations on the top and bottom
line. Its share price was up nearly 5% in after-hours trading. Along with Microsoft,
this may be enough to end this pullback.
Pullback Data:
Days since top: 17 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: 9.8%; (Avg.= 13% for non-crash pullbacks)
The S&P 500 is 2.4% below its 200-dMA.
The slope of the 200-dMA is still upward. If it turns
down, it could generate some more selling.
The daily sum of 20 Indicators improved from -8 to -6
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from -55 to -60 (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.
A few positive signs remain today. Technology was up,
buoyed by strong earnings from Microsoft and Apple. The markets are still
way overbought oversold. RSI was 14 (30 is
overbought oversold) and there have only been 5 up-days in the last month.
I am still in wait and see mode. I suppose I have to be
bearish since we don’t have a definitive bottom yet. Today was not the bottom, but the market doesn’t
have to fall much farther. With Apple’s stellar earnings report and the current
oversold conditions, I expect a positive day tomorrow. After that...I’m
optimistic, but 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
THURSDAY 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.
Today, I decreased my
stock-allocation in the portfolio a little, but it remains 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. If I can see a definitive bottom, I’ll add a lot more stocks to
the portfolio using an S&P 500 ETF.
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.
