“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.
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 1.9 million barrels from the
previous week. At 411.6 million barrels, U.S. crude oil inventories are about
13% below the five-year average for this time of year.” Story at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 2.6% to 4278.
-VIX dipped about 8% to 32.45.
-The yield on the 10-year Treasury rose to 1.955%.
Pullback Data:
Days since top: 45 (Avg= 30 days top to bottom for
corrections <10%; 60 days top to bottom for larger, non-crash pullbacks)
Drop from Top: Now 10.8% at close. Max at close: 13% (Avg.=
13% for non-crash pullbacks)
The S&P 500 is 4.2% below its 200-dMA & 4.9%
below its 50-dMA.
The slope of the 200-dMA is up, but only by a whisker.
(The S&P 500 isn’t there yet, but a falling 200-dMA is very bearish.)
We are headed for a “Death Cross” soon. Definition follows:
“The death cross is a technical chart pattern indicating
the potential for a major sell-off.
The death cross appears on a chart when a stock’s short-term moving average
crosses below its long-term moving
average. Typically, the most common moving averages used in this
pattern are the 50-day and 200-day moving averages.” Definition from...
https://www.investopedia.com/terms/d/deathcross.asp
TODAY’S COMMENT:
Wow, the Big-Bounce is back. Unfortunately, that doesn’t mean the
correction is over. Huge reversals are pretty common during big downturns. I
saw a comment on a trader discussion board that the large moves we’ve been
seeing haven’t happened since the dot.com crash of 2000. I don’t know if that’s true or not, but I
wouldn’t be surprised.
We still haven’t seen a high-volume washout yet.
Yesterday’s volume was the highest in the correction so far, but it was still 20%
below the panic volume that ended the Corona virus correction of Feb-Mar 2020.
I saw Eric Johnston of Cantor Fitzgerald on CNBC this
afternoon. He said (paraphrasing) “Investors aren’t appreciating the situation
we’re in...inflation is worse...earnings are falling...the last time the Fed
tried to correct this level of inflation the S&P 500 fell 50% and there’s a
war ongoing. We should not have an average equity risk premium as high we do
now.” He expects lower stock market prices ahead.
I agree with Eric. I don’t think we’ve seen the last of
the correction, though we might see a day or two more for the bounce.
The daily sum of 20 Indicators jumped from +1 to +9 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from +35 to +49 (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; SENTIMENT & VOLUME are
neutral. PRICE is bullish.
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
TRADING POSITIONS: I ‘m still
holding the XLE-ETF (Energy).
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.
My stock-allocation in the
portfolio is now about 35% 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.
