“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Despite global surges in COVID cases, the markets are
reflecting the new reality that COVID is here to stay albeit more on our terms
than its.” Kevin Philip, managing director at Bel Air Investment Advisors
“For the media (and Ron Klain) to pronounce the Biden
Administration “scandal free” is akin to the NFL once
denying that traumatic brain injury was rampant in football. If
there is no coverage, there is no scandal. That is certainly an accomplishment
worth noting, but hardly worth celebrating.” – Professor Jonathan Turley,
honorary Doctorate of Law from John Marshall Law School.
IHS MARKIT MANUFACTURING PMI (IHS Markit)
“December PMITM data from IHS Markit indicated a further
subdued upturn in production across the US manufacturing sector. With the
exception of October and November, the pace of output growth was the slowest
since October 2020. At the same time, companies recorded the softest rise in
new orders for a year and a further substantial deterioration in vendor
performance amid severe material shortages. Longer lead times for inputs also
led to another sharp increase in backlogs of work, albeit the slowest for ten
months. Meanwhile, cost burdens continued to increase markedly...” Press
release at...
https://www.markiteconomics.com/Public/Home/PressRelease/51d060f7a3314d1b8bb8d948e035d4c7
CONSTRUCTION SPENDING (ABA Banking Journal)
“Construction spending was at a seasonally adjusted
annual rate of $1,625.9 billion in November, 0.4% above the revised October
estimate of $1,618.8 billion. November’s figure is 9.3% above the November 2020
estimate of $1,487.2 billion.” Story at...
https://bankingjournal.aba.com/2022/01/construction-spending-increases-in-november/
BULLS SHOULD BEGIN 2022 WITH A WIN – THEN? (Heritage
Capital)
“...I can’t say that I am all bulled for January or Q1,
as surprising as that is for someone who has been super positive for so long.
There are a number of structural cracks that won’t easily be corrected with a
fresh surge to new highs as is somewhat likely this week. I feel myself
morphing into a sell the rally guy instead of buying all dips. That’s not
exactly comfortable right here, but it’s what the data tell me to do.” Story
at...
https://investfortomorrow.com/blog/bulls-should-begin-2022-with-a-win/
OMICRON MAY IMPACT THE LUNGS DIFFERENTLY (FoxNews)
“Hamster models from the University of Tokyo show that
omicron poorly infects and spreads in the lung, and is less pathogenic compared
to delta in a hamster model. Belgian researchers in Syrian hamsters see
the same thing," he [Anthony Fauci]
said. "NIH-funded studies that are ongoing right now in both
mouse and hamsters confirm the lesser virulence in the animal model. And,
studies here at the Vaccine Research Center at NIH, in the nonhuman primate
model, are ongoing and will await results of that." Story at...
https://www.foxnews.com/health/omicron-impact-lungs-differently
My experience is that Omicron is a bad head cold (sore
throat, fever, cough) with no effect on the lungs; I am triple vaxed. As we’ve
noted previously, vaccination does not provide mucosal immunity.
US EXPERTS QUESTION COUNTING COVID CASES (The Guardian)
“Some US infectious disease experts and public health
officials are questioning whether to continue using the number of coronavirus
cases as a metric for determining which mitigation efforts are appropriate, as
data suggests Omicron is less severe but
much more contagious than previous variants.” Story at...
https://www.theguardian.com/us-news/2022/jan/01/us-covid-case-counts-omicron
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:00 PM ET Monday. 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
-Monday the S&P 500 rose about 0.6% to 4797
-VIX slipped about 4% to 16.60
-The yield on the 10-year Treasury rose to 1.631%.
The S&P 500 made a new all-time high today, but all
is not well with the markets. Only 2.8% of all issues traded on the NYSE made
new, 52-week highs today. This indicates (again) that the advance is narrow. We had hoped this stat would continue to
improve, but apparently not. When we last saw a series of these low, new-high
numbers at S&P new-highs, there was a 10% correction that started about 2
weeks after the weakness started. So, if
we see a few more new-highs on the Index with weak 52-weeks new-highs we may
need to get defensive.
The Friday run-down of some important indicators turned
slightly more to the Bull side (7-bear and 12-bull) so I remain bullish in the
short-term.
I included a piece from Tom McClellan (Friday) where he
called for a sharp selloff, but I didn’t include the Graph in my comment so
I’ll do it today. To repeat from Friday: Tom mentioned that the advance-decline
numbers are diverging from the S&P 500.
Another way of looking at that is to consider the 100-day moving average
of the % of issues advancing on the NYSE as shown below in Red vs the S&P
500 in Black. It looks bearish to me. It
will need to decisively break above the upper trend-line before we can feel
better. Drops below 50% have not been good for the S&P 500.
The daily sum of 20 Indicators improved from +2 to +3
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -13 to -10 (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 improved to BUY. Price & Volume are bullish; VIX & Sentiment
are Neutral. The Long-Term Indicator enseble is designed to signal a buy after
a bottom. Now, it is signaling that
conditions are good. The LT ensemble can be Buy at a top so it may not be
saying that now is the time to buy more stocks.
I sold Apple. Based on its
numbers today, I did overreact when I sold it Friday....thinking too much!
I am a cautious Bull.
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
MONDAY 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 50% invested in stocks; this is my “normal” fully invested stock-allocation
of 50%. I trade about 15-20% of the total portfolio.
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.
