“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.
PAYROLL REPORT / AVG HOURLY EARNINGS / UNEMPLOYMENT
REPORT (YahooFinance)
“The U.S. economy notched another sizable payroll gain in
March as the labor market extended a strong and speedy recovery to bring
employment closer to pre-pandemic levels...Non-farm payrolls: +431,000
vs. +490,000 expected and an upwardly revised +750,000 in February...Average hourly earnings,
month-over-month: 0.4% vs. 0.4% expected...The
unemployment rate dropped a more-than-expected two-tenths of 1%, edging closer
to the historic low of 3.5% seen in February 2020...” Story at...
ISM MANUFACTURING INDEX (PRnewswire)
"The March Manufacturing PMI® registered
57.1 percent, a decrease of 1.5 percentage points from the February reading of
58.6 percent. This figure indicates expansion in the overall economy for the
22nd month in a row after a contraction in April and May
2020. This is the lowest reading since September
2020 (55.4 percent).” Press release at...
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.3% to 4546.
-VIX slipped about 5% to 19.567.
-The yield on the 10-year Treasury rose to 2.385%.
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: 62 (Avg= 30 days top to bottom for
corrections <10%; 60 days top to bottom for larger, non-crash pullbacks)
Drop from Top: Now 5.2%. Max at close: 13%
The S&P 500 is 1.3% ABOVE its 200-dMA & 3% ABOVE
its 50-dMA.
TODAY’S COMMENT:
Today was the opposite of Thursday – Friday, there was a
strong close that pushed the S&P 500 into positive territory.
On Friday’s I summarize a number of indicators to get a
weekly feel for trend. Overall, the Friday summary looks bullish.
The Friday run-down of some important indicators remained
to the bullish side (6-bear and 12-bull). These indicators tend to be both
long-term and short-term, so they are different than the 20 that I report on
daily. Details follow:
BULL SIGNS
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is above 50%.
-Smoothed Buying Pressure minus Selling Pressure is headed
up
-MACD of S&P 500 price made a bullish crossover, 16
March.
-Short-term new-high/new-low data is rising.
-Long-term new-high/new-low data is rising.
-Slope of the 40-dMA of New-highs is up, but not by much.
This is one of my favorite trend indicators.
-The Smart Money (late-day action) is rising. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-The size of up-moves has been larger than the size of
down-moves over the last month.
-VIX has been falling rapidly.
-Cyclical Industrials (XLI-ETF) are outperforming the
S&P 500.
-McClellan Oscillator.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA
are both ABOVE the 20-dEMA.
NEUTRAL
-There has been only 1 Distribution Day since the last
Follow-Thru Day.
-There have been 2 Statistically-Significant days (big
moves in price-volume) in the last 15-days.
-The S&P 500 is 1.3% above its 200-dMA (Bear
indicator is 12% above the 200-day.). This value was 15.9% above the
200-dMA when the 10% correction occurred in Sep 2020. (Bigger bottoms are
formed when the Index is at, or below, the 200-dMA.)
-Non-crash Sentiment indicator is neutral.
-Bollinger Bands are neutral.
-RSI is close to overbought but not there yet.
-Overbought/Oversold Index (Advance/Decline Ratio)
- Issues advancing on the NYSE (Breadth) vs the S&P
500 is neutral.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 29 March.
-The Fosback High-Low Logic Index is neutral, but is
close to bear territory.
-There have been 11 up-days over the last 20 sessions –
neutral.
-There have been 6 up-days over the last 10 sessions–
leaning bullish, but neutral.
-No 90% up or down days. I’ve seen a comment from a Pro
that the correction won’t end until the S&P 500 has a 90% down-volume day.
-There was a Hindenburg Omen signal on 10 January. It has been cancelled because the McClellan
Oscillator subsequently turned positive.
-The Calm-before-the-Storm/Panic Indicator.
-2.8% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high, 3 January. (There is no
bullish signal for this indicator.) This indicated that the advance was too
narrow and a correction was likely to be >10%. – It proved correct, but is
now Expired
-15 February, the 52-week, New-high/new-low ratio
improved by 4.2 standard deviations – Bullish, but the signal has expired.
-58% of the 15-ETFs that I track have been up over the
last 10-days.
BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is below 50%.
-The 100-dMA % of issues advancing on the NYSE
(Breadth) is below 50%
-The 50-dMA % of issues advancing on the NYSE (Breadth)
has been below 50% for 77 consecutive days. (3 days in a row is my bear signal)
-My Money Trend indicator is headed down.
-The S&P 500 is under-performing the Utilities
ETF (XLU) over the last 40 sessions.
On Friday, 21 February, 2 days after the top before the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there
are 6 bear-signs and 12 bull-signs. Last week, there were 4 bear-signs and 12
bull-signs.
The daily sum of 20 Indicators remained +5 (a positive
number is bullish; negatives are bearish); the 10-day smoothed sum that smooths
the daily fluctuations declined from +122 to +112 (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 & VIX are Bullish; VOLUME & SENTIMENT are
hold.
I am a Bull, but I’ll be quick to reduce stock holdings
if indicators warrant it.
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
FRIDAY 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.
