“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Faced with a combination of record speculative extremes
and deteriorating speculative conditions, investors may want to remember that
the best time to panic is before everyone else does.” – John Hussman, Phd.
EXISTING HOME SALES (CNBC)
“Sales of previously owned homes fell 7.2% month to month
in February to a seasonally adjusted annualized rate of 6.02 million units,
according to the National Association of Realtors. That significantly missed
analysts’ expectations...” Story at...
LEADING ECONOMIC INDEX (Conference Board)
“The Conference Board Leading Economic
Index® (LEI)for theU.S. increased by 0.3 percent in February to 119.9
(2016 = 100), following a 0.5 percent decrease in January and a 0.8 percent
increase in December. “The US LEI rose slightly in February, partially
reversing January’s decline,” said Ataman Ozyildirim, Senior Director of
Economic Research at The Conference Board. “However, the latest
results do not reflect the full impact of the Russian invasion of Ukraine,
which could lower the trajectory for the US LEI and signal
slower-than-anticipated economic growth in the first half of the year.” Report
at...
https://www.conference-board.org/topics/us-leading-indicators/press/us-lei-mar-2022
RECESSIOIN RISK RISING (RIA)
“Recession risk is rising rapidly. In fact, it is
possible that we may already be in one. While such a claim may sound
impossible, given that Q4-GDP was above 5% in terms of annualized growth, such
would not be the first time such a turn occurred. As I discussed in “Shortest Recession In History,” the 2020 recession
lasted just two months. However, during those two months, the economy fell by
31.4% (GDP), and the financial markets plunged by 33%. Both of those declines,
as shown in the table below, are within historical norms.” - Lance Roberts.
Commentary at...
https://realinvestmentadvice.com/recession-risk-rising-rapidly-or-we-may-be-in-one-already/
THREE DAYS UP (Heritage Capital)
“...I am not ready to turn hog wild bullish here. Back-to-back-to-back
up 1% days are bullish over the long-term. Lots of folks posted this on Twitter
and every single occurrence over the past 20 years led to a higher stock market
one year later. Three and six month returns were also very strong. Of course,
the past 20 years have largely been strong except for 207-2009...I fear that
additional strength now would exhaust the rally and cause another decline to set
up. Finally, today is one of those giant, quarterly options expiration days
which used to cause high volatility. I highly doubt that’s the case today. Much
ado about nothing in my book." - Paul Schatz commentary at...
https://investfortomorrow.com/blog/stocks-rally-three-straight/
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.2% to 4411.
-VIX fell about 4% to 25.67.
-The yield on the 10-year Treasury dipped to 2.177%.
Pullback Data:
Days since top: 52 (Avg= 30 days top to bottom for
corrections <10%; 60 days top to bottom for larger, non-crash pullbacks)
Drop from Top: Now 7% at close. Max at close: 13% (Avg.=
13% for non-crash pullbacks)
The S&P 500 is 0.2% below its 200-dMA & 0.7% above
its 50-dMA.
TODAY’S COMMENT:
On Friday’s I summarize a number of indicators to get a
weekly feel for trend.
The Friday run-down of some important indicators reversed
sharply to the bullish side (4-bear and 12-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 size of up-moves has been larger than the size of
down-moves over the last month.
-Cyclical Industrials (XLI-ETF) are outperforming the
S&P 500.
-Non-crash Sentiment indicator is giving a buy signal (84%-bulls
on a 5-day basis). This is based on std deviation in relatively small
pullbacks, like the one we are in so far.
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is above 50%.
-The smoothed advancing volume on the NYSE is rising.
-Smoothed Buying Pressure minus Selling Pressure is headed
up
-MACD of S&P 500 price made a bullish crossover, 16
March.
-My Money Trend indicator has turned up.
-Short-term new-high/new-low data is rising.
-Long-term new-high/new-low data is rising.
-The Smart Money (late-day action) is rising. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-McClellan Oscillator.
NEUTRAL
- Issues advancing on the NYSE (Breadth) are diverging with
the S&P 500 Index in the bullish direction.
-Slope of the 40-dMA of New-highs is flat. This is one of
my favorite trend indicators.
-VIX is rising but not enough to give a signal.
-There have been 4 Statistically-Significant days (big
moves in price-volume) in the last 15-days.
-The 5-10-20 Timer System is HOLD; the 5-dEMA and 10-dEMA
are not both BELOW the 20-dEMA.
-55% of the 15-ETFs that I track have been up over the
last 10-days.
-There were 6 Distribution Days in the last week, but a
Follow-thru day 16 March cancelled them.
-The S&P 500 is 0.2% below its 200-dMA (Bear
indicator is 12% above the 200-day.). 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.)
-Bollinger Bands are very close to overbought now, but
still neutral.
-RSI
-Overbought/Oversold Index (Advance/Decline Ratio)
-There was a Hindenburg Omen signal on 10 January. It has been cancelled because the McClellan
Oscillator subsequently turned positive.
-The Fosback High-Low Logic Index is neutral, but has
moved closer to bear territory.
-No 90% up or down days. I’ve seen a comment from a Pro
that the correction won’t end until the S&P 500 has a 90% down-volume day.
-There have been 8 up-days over the last 20 sessions –
neutral.
-There have been 5 up-days over the last 10 sessions–
leaning bullish, but neutral.
-The Calm-before-the-Storm/Panic Indicator.
-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 indicated that the advance was too
narrow and a correction was likely to be >10%. – It proved correct, but is
now Expired
-15 February, the 52-week, New-high/new-low ratio
improved by 4.2 standard deviations – Bullish, but the signal has expired.
-The S&P 500 is under-performing the Utilities
ETF (XLU) over the last 40 sessions, but this has been rapidly improving so I’ll
call it neutral for now.
BEAR SIGNS
-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 67 consecutive days. (3 days in a row is my bear signal)
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 8 March.
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 4 bear-signs and 12 bull-signs. Last week, there were 19 bear-signs and
3 bull-signs.
That’s a huge turn-around in the Bull-Bear numbers. It suggests that the bottom was at the retest
on 14 March when the S&P 500 was 4173. Friday, the Index broke above its
50dMA and is now a whisker below its 200-dMA.
We’ve seen 4 straight up-days with a gain of 6.8% - Wow!
We’ve seen a lot of bull signs and bullish action on the
chart. You may wonder, why not buy now? Let’s
review: My market analysis at the 14 March retest showed that the internals
were bad compared to the prior low. If 14 March was the bottom, it would be the
worst comparison at a low that I have seen in over 10-years of records. Unfortunately,
as I have to admit, sometimes Mr. Market pays no attention to me.
While the ongoing rally could still be just a big bounce
in a bear market, it could also bring a return to the old highs.
There is another Bull sign I need to see before I get
back in - and that’s for the S&P 500 chart to confirm the trendline break
above its upper trendline. There are 2 tests sometimes used: (1) The S&P
500 must remain above its trend line for 2 days, which it has. (2) The S&P 500 needs to break 3% above its
upper trendline. That level is about 4535.
If that happens, I’ll be a bull, but probably not an immediate buyer.
The daily sum of 20 Indicators improved from +11 to +15
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from +33 to +43 (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 & SENTIMENT are Bullish; VIX is
neutral.
To summarize, indicators look good, but I’ll repeat what
Paul Schatz, President of Heritage Capital, stated above: “I fear that
additional strength now (Friday) would exhaust the rally and cause another
decline to set up.”
I am almost a Bull – let’s see what happens Monday.
BEST ETFs - 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.
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
BEST DOW STOCKS - TODAY’S MOMENTUM
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.
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
FRIDAY MARKET INTERNALS (NYSE
DATA)
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.
After my sale of XLE
(Energy-ETF) Tuesday, my stock-allocation in the portfolio is now about 30%
invested in stocks. This is below 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.
