“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.
"If I was Darth Vader and I wanted to destroy the US
economy, I would do aggressive spending in the middle of an already hot
economy...This is the biggest bubble I've seen in my career." - Stanley
Druckenmiller, billionaire investor.
My cmt: Yeah, we really need Build-Back-Better - more
gasoline to feed the inflation fire.
JOBLESS CLAIMS (The Week)
“Initial jobless claims, which are seen as a proxy for
layoffs, fell by 18,000 to a seasonally-adjusted 215,000 for the last week,
"down from the revised 233,000 the week before," the Journal writes,
per a Thursday Labor Department report. The 215,000 total was also the lowest
since the start of the year and below the Wall Street estimate of 225,000,
per CNBC.” Story at...
https://theweek.com/business/1010864/jobless-claims-fall-to-a-better-than-expected-215000
ISM NON-MANUFACTURING INDEX (ISM via PR newswire)
“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... Panel sentiment remained strongly
optimistic, with 12 positive growth comments for every cautious comment, up from
January's ratio of 7-to-1.” Press
release at...
FACTORY ORDERS (WKZO)
“New orders for U.S.-made goods increased more than
expected in January, pointing to continued strength in manufacturing despite
supply challenges. The Commerce Department said on Thursday that factory orders
rose 1.4% in January.” Story at...
https://wkzo.com/2022/03/03/u-s-factory-orders-growth-beats-expectations-in-january/
UTILITIES ARE STILL WARNING (NTSM)
The Red plot is the spread between S&P 500 and the
Utilities ETF (XLU). If the red line is below zero, Utilities are outperforming
the Index. Utilities outperformed the Index by a lot today (+1.8% vs -0.5%).
All of this is bearish. If investors were confident, they wouldn't be buying Utilities.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 0.5% to 4363.
-VIX slipped about 1% to 30.48.
-The yield on the 10-year Treasury slipped to 1.845%.
Today’s report is not much different than yesterday...
Pullback Data:
Days since top: 41 (Avg= 30 days top to bottom for
corrections <10%; 60 days top to bottom for larger, non-crash pullbacks)
Drop from Top: Now 9% at close. Max at close: 11.9%
(Avg.= 13% for non-crash pullbacks)
The S&P 500 is 2.3% below its 200-dMA & 3.8%
below its 50-dMA.
The slope of the 200-dMA is up, but not by much.
The daily sum of 20 Indicators declined from +8 to +5 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -1 to +10 (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.
Yesterday, New-highs outpaced new-lows giving us a
glimmer of hope since it was the first positive spread since the last “bounce
top” on 2 Feb. It didn’t last long. Today, new-lows once again outpaced
new-highs. During the decline in the Coronavirus “30%-correction,” there were
three occasions where the spread turned positive. Unfortunately, the spread was
never positive for more than 2 days until after the bottom. Bottom line: We’ll
need to see sustained improvement in the new-high/new-low data to feel more
bullish.
There were, again, 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 Fosback High-Low Logic Index is currently neutral. It
called the top of the 20% correction in Sep-Dec 2018 to the day. There were also
a dozen Hindenburg Omens before that top, but who’s counting? There’s no point
in anticipating this signal – it will turn or not. There’s certainly been
enough weakness without Fosback’s help. A Fosback bear signal now would signal
that a much deeper correction would be more likely.
The Long Term NTSM indicator
ensemble remained HOLD. VIX is bearish; Volume & Sentiment are Neutral; PRICE
is bullish and the New-High/New-Low change-in-spread indicator 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.
In the absence of a retest, I’ll have to see rapid
improvements in price and internals along with bullish divergences.
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
THURSDAY 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.
