“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.
NEW HOME SALES (Yahoo Finance)
“Sales of new U.S. single-family homes unexpectedly fell
in February amid rising mortgage rates and higher house prices, which are
reducing affordability for some first-time buyers. New home sales decreased 2%...”
Story at...
https://finance.yahoo.com/news/u-home-sales-fall-second-141040765.html
New home sales are seen as a proxy for the economy.
Higher rates and inflation are not good for the economy either.
EIA CRUDE INVENTORIES (EIA)
“Over the past four weeks, crude oil imports averaged
about 6.2 million barrels per day, 9.1% more than the same four-week period
last year...U.S. commercial crude oil inventories (excluding those in the
Strategic Petroleum Reserve) decreased by 2.5 million barrels from the previous
week. At 413.4 million barrels, U.S. crude oil inventories are about 13% below
the five-year average for this time of year
https://ir.eia.gov/wpsr/wpsrsummary.pdf
From CME Group: “If inventories are low, this will lead
to increases in crude oil prices - or price increases for a wide
variety of petroleum products such as gasoline or heating oil.” More at...
https://www.cmegroup.com/education/events/econoday/2022/03/feed541147.html
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell about 1.2% to 4456.
-VIX rose about 3% to 23.57.
-The yield on the 10-year Treasury was 2.303%.
I think the correction is over, but not everyone agrees
so I’ll keep the pullback data for a while longer.
PULLBACK DATA:
If the correction has ended:
-Drop from Top: 13% (Avg.= 13% for non-crash pullbacks)
-Days from Top to Bottom: 48-days. (Avg= 30 days top to
bottom for corrections <10%; 60 days top to bottom for larger, non-crash
pullbacks)
Currently:
Days since top: 55 (Avg= 30 days top to bottom for
corrections <10%; 60 days top to bottom for larger, non-crash pullbacks)
Drop from Top: Now 7.1%. Max at close: 13%
The S&P 500 is 0.4% BELOW its 200-dMA & 0.8%
ABOVE its 50-dMA.
TODAY’S COMMENT:
Wednesday, it was disappointing that the S%P 500 didn’t remain
above its 200-dMA. It slipped to 0.2%
below the 200-day. Why is this important? Here’s a note from Investopedia: “The 200-day SMA,
which covers roughly 40 weeks of trading, is commonly used in stock
trading to determine the general market trend. As long as a stock price remains
above the 200-day SMA on the daily time frame, the stock is generally
considered to be in an overall uptrend.” More at...
We want to see the Index remain above its 200-dMA for
consecutive days to feel a little better. The Index also closed at its low for
the day. That’s not good either and we
may expect some negative follow-thru tomorrow. Still, a dip to around the 4300
level would not be a surprise nor would it be too much of a worry, even though
it will be uncomfortable.
The Index did remain above its 50-dMA, so that’s good
news.
The slope of the 40-dMA of New-highs is now rising and is
pressing its upper trend line. This is
bullish, but we’ll need to see it move higher before we can party.
The daily sum of 20 Indicators slipped from +14 to +12 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from +68 to +71 (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 BUY: PRICE, VOLUME, VIX & SENTIMENT are Bullish.
17 thru 22 March there were 28 of the 30 Dow stocks above
their 10-dMAs. That is a “correction
over” signal according to some. I haven’t back-tested this more than a year
back, so I can’t speak for its accuracy, but it is an encouraging additional
bullish sign. It was correct last December.
I remain a Bull.
While the correction seems to be over, the question is,
what will happen when the markets get back to the old highs? I am not
optimistic for this year as a whole.
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
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.
I added XLK-ETF late in the
day. My stock-allocation in the portfolio is now about 60% invested in stocks.
This is above 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.
