“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.
Here’s analysis and commentary on the stock market for
Friday, 25 March 2022.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.7% to 4576.
-VIX fell about 6% to 19.63.
-The yield on the 10-year Treasury slipped to 2.440%.
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: 58 (Avg= 30 days top to bottom for
corrections <10%; 60 days top to bottom for larger, non-crash pullbacks)
Drop from Top: Now 4.6%. Max at close: 13%
The S&P 500 is 2.2% ABOVE its 200-dMA & 3.7%
ABOVE its 50-dMA.
TODAY’S COMMENT:
RSI (Relative Strength Index) is nearly overbought. I use this indicator along with Bollinger
Bands. They are currently getting close
to overbought, but not there yet. The Fosback Hi-Lo Logic Index (see yesterday’s
blog) continues to creep towards a sell signal that Fosback said predicted a “crash”.
Most other indicators are positive, so it will be interesting to see if other
indicators confirm the Fosback sell-signal, if it gets there. Currently, none
of my indicators are warning of a top.
The S&P 500 has been up 8 days out of the last
10. That is close to an overbought
indication too. It appears that this
rally may not make a new high before it fails, i.e., my prediction that the
Index would make a new high may be in jeopardy.
I won’t predict what the indicators will do. We’ll just have to wait and
see.
The daily sum of 20 Indicators improved from +13 to +15
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from +90 to +108 (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 & are Bullish; SENTIMENT was
hold.
I remain a Bull, but I am getting more cautious.
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
MONDAY 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 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.
