“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.
ISM MANUFACTURING INDEX (ISM via prnewswire)
“Economic activity in the manufacturing sector grew
in February, with the overall economy achieving a 21st
consecutive month of growth, say the nation's supply executives in the
latest Manufacturing ISM® Report On Business®...."The February Manufacturing
PMI® registered 58.6 percent, an increase of 1 percentage point from the
January reading of 57.6 percent. This figure indicates expansion in the overall
economy for the 21st month in a row after a contraction in April and May 2020..."Manufacturing performed well for the
21st straight month, with demand registering month-over-month growth and
consumption softening slightly, though less than forecast..." Report at...
CONSTRUCTION SPENDING (Forexfactory.com)
“Construction spending during January 2022 was estimated
at a seasonally adjusted annual rate of $1,677.2 billion, 1.3% above the
revised December estimate of $1,655.8 billion, according to the U.S. Census
Bureau. The January figure is 8.2% above the January 2021 estimate...” From...
https://www.forexfactory.com/news/1141752-us-construction-spending-for-january-13-vs-02
UKRAINE CRISIS COULD TRIGGER OIL SUPERCYCLE (OilPrice.com)
“The Ukraine crisis has prompted fears of disruption in
Russian oil and gas exports. Spare oil production capacity is already under stress,
and it will likely worsen as the crisis in Ukraine continues. Some analysts
believe that “an oil supercycle is inevitable... “Spare capacity is falling and
the [oil] market is having to reprice that lack of safety margin,” JP Morgan’s
head of global energy strategy, Christyan Malek, told the Financial Times last week.” Story at...
https://oilprice.com/Energy/Crude-Oil/The-Ukraine-Crisis-Could-Trigger-An-Oil-Supercycle.html
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 1.6% to 4306.
-VIX rose about 11% to 33.32.
-The yield on the 10-year Treasury fell to 1.717%.
Pullback Data:
Days since top: 39 (Avg= 30 days top to bottom for corrections
<10%; 60 days top to bottom for larger, non-crash pullbacks)
Drop from Top: Now 10.2% at close. Max at close: 11.9%
(Avg.= 13% for non-crash pullbacks)
The S&P 500 is 3.5% BELOW its 200-dMA & 5.2%
BELOW its 50-dMA.
The slope of the 200-dMA is up, but not by much.
Volumes are picking up again. Today’s volume was about 20% higher than the
monthly average. We don’t want to see volumes increasing since it suggests more
selling pressure. Worse yet, only one third of today’s volume was up-volume.
Only about 40% of issues on the NYSE were advancing. Bottom line: Volume looks
bad.
Here are a couple of bearish (for now) charts...
See the chart below:
New-high-new-low data looks bad. New-highs are still falling.
Breadth (% of issues advancing on the NYSE) looks bad. The
100-dMA is below 50% and falling. We want to see a break out from the down-trending
channel.
Enough said.
The daily sum of 20 Indicators improved from +7 to +10 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum that
smooths the daily fluctuations improved from -38 to -18 (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.
Long-term indicators improved too.
The Long Term NTSM indicator
ensemble improved to HOLD. VIX is bearish; Volume, Price & Sentiment are
Neutral; New-High/New-Low data is bullish based on the 25 Feb swing in
new-high/new-low data.
I’m waiting for another retest. That’s when we’ll get more information about
this correction and where we go from there.
Until we see more bullish signs, I remain bearish.
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.
*For additional background on the ETF ranking system see NTSM Page at…
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.
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
TUESDAY 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.
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.
