“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.
“The entire world is watching as Vladimir Putin uses energy as a weapon in an attempt to
extort and coerce our European allies. While Americans decry what is happening
in Ukraine, the United States continues to allow the import of more than half a
million barrels per day of crude oil and other petroleum products from Russia
during this time of war.” – Senator Joe Manchin, chair of the Senate Energy
and Natural Resources Committee.
FED BEIGE BOOK (WSJ)
“The U.S. economy grew at a modest to moderate pace from
mid-January through early February as the Omicron variant of Covid-19 disrupted businesses and held back consumer spending, the
Federal Reserve said Wednesday. The Fed’s periodic compilation of business
anecdotes from around the country, known as the Beige Book, provided the latest
evidence that the pandemic dealt a setback to the economic recovery in recent
months.” Story at...
ADP EMPLOYMENT CHANGE (ADP via prnewswire)
“Private sector employment increased by 475,000 jobs from
January to February according to the February ADP® National Employment ReportTM..."Hiring remains
robust but capped by reduced labor supply post-pandemic. Last month large
companies showed they are well-poised to compete with higher wages and benefit
offerings, and posted the strongest reading since the early days of the
pandemic recovery," said Nela Richardson,
chief economist, ADP. "Small companies lost ground as they continue
to struggle to keep pace with the wages and benefits needed to attract a
limited pool of qualified workers." Press release at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 2.6 million barrels from the
previous week. At 413.4 million barrels, U.S. crude oil inventories are about
12% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
WHITE HOUSE QUIETLY CALLS ON US OIL COMPANIES TO INCREASE
PRODUCTION (OilPrice.com)
“Though words are different than deeds—and President Joe
Biden’s deeds have been decisively anti-fossil fuel expansion—a White House
official told U.S. oil companies on Tuesday that they could increase production
if they want. “Prices are quite high, the price signal is strong. If folks want
to produce more, they can and they should,” White House National Economic
Council Deputy Director Bharat Ramamurti said in an interview today...U.S. oil
companies have long held that while the Administration hasn’t directly
restricted U.S. output, the energy policies flowing out of the White House have
put a damper not only on the attitude involving crude oil production but has
made it far more difficult for oil companies to ramp up.” Story at...
APPLE AND GOOGLE RUSSIAN SANCTIONS
“Apple Pay and Google Pay no longer work on Moscow's
metro system, leading to long queues as people fumble about for cash.” – Tweet
by Jason Corcoran, Irish Journalist.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.9% to 4306.
-VIX fell about 8% to 30.74.
-The yield on the 10-year Treasury was 1.850%.
Pullback Data:
Days since top: 40 (Avg= 30 days top to bottom for
corrections <10%; 60 days top to bottom for larger, non-crash pullbacks)
Drop from Top: Now 8.5% at close. Max at close: 11.9%
(Avg.= 13% for non-crash pullbacks)
The S&P 500 is 1.7% below its 200-dMA & 3.4% below
its 50-dMA.
The slope of the 200-dMA is up, but not by much.
Volumes were up again, today. That’s OK, it was an up-day and up-volume is
obviously bullish.
The daily sum of 20 Indicators declined from +10 to +8 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -18 to -1 (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.
New-highs outpaced new-lows. That’s the first positive spread since the
last “bounce top” on 2 Feb. All is not well though. There were too many
new-lows today. When both new-highs and new-lows
are high, it is a sign that the markets are not well. If the trend continues it
will eventually trigger a bearish signal from the Fosback New-high/new-low
Logic Indicator.
The S&P 500 has retraced 44% back toward the recent
double top from its (possible) bottom of 4226. It would not be a surprise to
see more retracement higher and it is always possible that the bottom was 23
February, but not all signs are pointing that way.
Today was a statistically significant up-day. That just means
that the price-volume move exceeded my statistical parameters. Statistics show
that a statistically-significant, up-day is followed by a down-day about 60% of
the time.
The Long Term NTSM indicator
ensemble remained 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. The back-and-forth swings we’ve
seen recently in the S&P 500 are more indicative of a top than a bottom. We’ll
see...
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
I re-established a position in
the XLE ETF Tuesday. It is hanging in there and I may have been hasty in selling
the position.
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
WEDNESDAY 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.
My stock-allocation in the
portfolio is now about 40% 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.
