“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
RETAIL SALES (CNBC)
“Retail sales fell much more than expected in December as
surging prices took a big bite out of spending, the Commerce Department
reported Friday. The advance monthly sales report to close out the year showed
a decline of 1.9%...” Story at...
https://www.cnbc.com/2022/01/14/retail-sales-december-2021.html
INDUSTRIAL PRODUCTION (MarketWatch via Msn.com)
“Industrial production slipped 0.1% in December, the Federal
Reserve reported Friday... Capacity utilization inched lower to 76.5%
in December from 76.6% in the prior month.” Story at...
UNIV OF MICHIGAN SENTIMENT (Univ of Michigan)
“Sentiment posted a small loss in early January (-2.5%),
falling to the second lowest level in a decade, which was recorded in November
(67.4). The Sentiment Index has averaged just 70.3 in the past six months,
whereas in the first six months of 2021 it averaged 82.9. While the Delta and
Omicron variants certainly contributed to this downward shift, the decline was
also due to an escalating inflation rate. Three-quarters of consumers in early
January ranked inflation, compared with unemployment, as the more serious
problem facing the nation.” Story at...
My cmt: Unemployment shouldn’t even be on the list. The
unemployment rate was 3.9% at the report last week. A friend of mine was an MBA. He was taught that 4% was full-employment!
The WSJ had an article today where economists discussed the current full
employment. Why is this an issue? Politicians like to lie to the public to
create a crisis. We need a massive bill to create jobs? BS. Just remember Druckenmiller’s
comment:
"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.
BUYING PRESSURE / SELLING PRESSURE (NTSM)
Here’s an interesting indicator. Buying Pressure = S&P
500 (on up-days) x Up-volume; Selling Pressure = S&P500 (on down-days) x
Down Volume. Calculate the S&P 500 changes on a % basis so the indicator
can be compared over different time periods. The falling line indicates selling
pressure is outpacing buying pressure, so it’s a bearish sign now.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:00 PM ET Friday. 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
-Friday the S&P 500 rose about 0.1% to 4663.
-VIX slipped about 6% to 19.19.
-The yield on the 10-year Treasury rose to 1.792%.
The Friday run-down of some important indicators turned more
to the Bear side (15-bear and 2-bull). These indicators tend to be both
long-term and short-term, so they are different than the 20 that I report on daily.
Details follow:
BULL SIGNS
-The smoothed advancing volume on the NYSE is rising.
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500.
NEUTRAL
-My Money Trend indicator is flat.
-The Smart Money (late-day action) is flat. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-The S&P 500 has had 5 Distribution Days in the last 25-days;
Neutral. Others were cancelled by a Follow-thru day 15 December.
-There have been 2 Statistically-Significant days (big
moves in price-volume) in the last 15-days. This can be a bull or bear. Now
it’s neutral.
-The S&P 500 is 5.5% above its 200-dMA (Bear
indicator is 12%.). This value was 15.9% above the 200-dMA when the 10%
correction occurred in Sep 2020. (Bigger bottoms are formed when the Index is
at, or below, the 200-dMA.)
-11 January, the 52-week, New-high/new-low ratio improved
by 2.1 standard deviations somewhat bullish, but not enough to send a signal.
-RSI was almost bullish, but not quite.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to send a signal.
-Non-crash Sentiment indicator is bullish (96%-bulls on a
5-day basis). (Too bullish is bearish.)
-Bollinger Bands are neutral.
-The S&P 500 Index is OK when compared to the issues
advancing on the NYSE (Breadth).
-Overbought/Oversold Index (Advance/Decline Ratio).
-Back-to-back >80% up-volume days cancelled two prior
high, down-volume days and gave a bullish buy signal on 7 December. This signal
has expired.
-The Fosback High-Low Logic Index is neutral, but moving
toward bear territory.
-There have been 9 up-days over the last 20 sessions –
Neutral.
-There have been 4 up-days over the last 10-
-The Calm-before-the-Storm Indicator.
-There were Hindenburg Omen signals 13 & 16 December. These have been cancelled because the
McClellan Oscillator turned positive.
-49% of the 15-ETFs that I track have been up over the
last 10-days – It’s headed up now, so it could be called bullish. Let’s call it neutral for consistency.
BEAR SIGNS
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is below 50%.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is below 50%.
-The 100-dMA % of issues advancing on the NYSE
(Breadth) is below 50%
-The 50-dMA % of issues advancing on the NYSE (Breadth)
has been below 50% for 24 consecutive days. (3 days in a row is my bear signal)
-McClellan Oscillator.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 5 January.
-Buying Pressure minus selling pressure is trending down.
-MACD of S&P 500 price made a bearish crossover, 6
January. Strong bearish signal now.
-Short-term new-high/new-low data is falling.
-Long-term new-high/new-low data is falling.
-Slope of the 40-dMA of New-highs is down. This is one of
my favorite trend indicators.
-2.8% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high, 3 January. (There is no
bullish signal for this indicator.) This indicates that the advance is too narrow
and a correction from here is likely to be >10%.
-VIX.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA
are both BELOW the 20-dEMA.
-The S&P 500 is under-performing the Utilities
ETF (XLU) over the last 40 sessions.
On Friday, 21 February, 2 days after the top before the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there
are 15 bear-signs and 2 bull-signs. Last week, there were 13 bear-signs and
6 bull-signs.
The daily sum of 20 Indicators declined from -2 to -4
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from -22 to -28 (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 HOLD. Volume is bearish; Price, VIX & Sentiment are
Neutral. The important signal was yesterday – it was SELL.
Today’s close on the S&P 500 was close enough to be considered
a test of Thursday’s low. As such, we are looking for lower volume with
improving market internals. We didn’t
get either so it still looks like this pullback has further to go. Like yesterday,
I will warn that Mr. Market doesn’t always pay attention to my numbers.
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
FRIDAY 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.
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.
