“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
"If I was Darth Vader and I wanted to destroy the US
economy, I would do aggressive spending in the middle of an already hot
economy...This is the biggest bubble I've seen in my career." - Stanley
Druckenmiller, billionaire investor.
My cmt: Got to have that Build Back Better!
"Russia will be held accountable if it invades - and
it depends on what it does. It's one thing if it's a minor incursion and we end
up having to fight about what to do and what to not do, et cetera..." –
President Joe Biden.
My cmt: Just another example that Biden is failing
mentally. He gave Russia permission to conduct a minor incursion? Per Mathew
Chance on CNN: Ukrainian officials said they were “shocked that President Biden
would give a green light to Vladimir Putin.” The Biden administration spent
today walking back Biden’s comments.
JOBLESS CLAIMS (YahooFinance)
“Weekly new jobless claims unexpectedly jumped last week
by the most since October, with some renewed virus-related disruptions at least
temporarily impeding the labor market's recovery...Initial jobless claims, week ended Jan.
15: 286,000 vs.
225,000 expected...” Story at...
https://finance.yahoo.com/news/weekly-unemployment-claims-week-ended-jan-15-2022-200147927.html
PHILADELPHIA FED INDEX (Morningstar)
“Factory activity in the Philadelphia area picked up pace
in January compared with the previous month as demand for goods strengthened,
according to a survey from the Federal Reserve Bank of Philadelphia released
Thursday. The index for current general activity of the Business Outlook Survey
rose to 23.2 in January from 15.4 in December...” Story at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 0.5 million barrels from the
previous week. At 413.8 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
STOCK MARKET COULD DROP ANOTHER 10% (YahooFinance)
"While the average stock has seen quite a bit of
downside, the major averages still have a good 10% down from here," said
Wilson [Morgan Stanley's chief markets strategist Mike Wilson] on Yahoo Finance
Live.
https://finance.yahoo.com/news/stock-market-could-drop-another-10-soon-top-strategist-174400074.html
100-dMA BUY SIGNAL (ZeroHedge)
“Since June 2020, the benchmark has closed below its
100-day average eight times, data compiled by Bloomberg show. Three of those
instances, it never traded lower after that, even intraday, and three times
there was never a lower close after. One of the occurrences there was one lower
close -- by 0.03% -- before it headed higher, and the worst time was one close
0.16% lower before it recovered, the data show.” Commentary at...
https://www.zerohedge.com/markets/technical-sell-signal-100-hit-rate-dip-buyers-triggered
My cmt: Sure didn’t look like it today!
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 9:00 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 new cases fell today.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.1% to 4483.
-VIX rose about 7% to 25.59.
-The yield on the 10-year Treasury slipped to 1.782%.
Pullback Data
Days since top: 12 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: 6.5% (Avg.= 13% for non-crash pullbacks)
The S&P 500 is 1.2% above its 200-dMA.
At today’s close, we saw Bollinger bands, RSI and the
Overbought/Oversold Index all bullishly “oversold.” However, earlier in the day,
the markets were up nearly 2%; I was tempted to buy some stocks. Utilities were outpacing the S&P 500 and
that was odd. I waited to see what would happen later in the day, but what happened was not good. It was an ugly,
bearish close...
Volume was higher than the prior low, but not drastically so. As expected, selling pressure continues to outpace buying pressure. Internals remain poor so no bottom yet.
The daily sum of 20 Indicators remained -8 today (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations declined from -53 to -59 (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 & VIX are bearish; Price & Sentiment are
Neutral. The important sell-signal was 12 Jan. Today is just a reminder that
conditions remain bearish.
The S&P 500 closed about 2% its 100-dMA today, a
continuing worrisome sign for the bulls. The Index is now closer to its 200-dMA
than its 100-dMA.
Corrections usually bottom after the Index heads straight
down in a waterfall pattern. The S&P 500 may be in one now, but if it is, there
is no telling how far it could go. We can
guess it might end at the 200-dMA. That
is now only 1.2% lower than Thursday’s close. Bottoms often occur on huge,
panic selling, but we haven’t seen that yet. After the bottom, it is normal for
a bounce to be followed by a retest of the low. That pattern is more likely if
the correction gets a little deeper. We’ll see...
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 up. I’m not convinced; we still don’t have clear signs that the market
weakness is over. As always, it could be, but the evidence isn’t clear yet.
I remain a Bear until proven
otherwise.
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.
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.
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.
