“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.
SENTIMENT SO BEARISH; ITS BULLISH (RIA)
“One of the hardest things to do is go “against” the
prevailing bias when it comes to investing. Such is known as contrarian
investing... ‘Even after
a 10% rally from the March lows, BofA’s sentiment indicator is still pushing
more extreme bearish conditions.’”
https://realinvestmentadvice.com/sentiment-is-so-bearish-its-getting-bullish/
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dipped about 1.7% to 4413.
-VIX rose about 15% to 24.37.
-The yield on the 10-year Treasury rose to 2.715%.
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:
If the correction has not ended:
Days since top: 68 (Avg= 60 days top to bottom for
>10% non-crash pullbacks)
Drop from Top: Now 8%. Max at close: 13%
The S&P 500 is 1.8% BELOW its 200-dMA & 0.3% BELOW
its 50-dMA.
TODAY’S COMMENT:
Three of the bull signs from Friday’s run-down switched
to neutral so conditions continue to decline. We did have a statistically
significant down-day today. That just means that the price-volume move exceeded
my statistical parameters. Statistics show that a statistically-significant, down-day
is followed by an up-day about 60% of the time.
That could be an end to this downturn in the short-term,
but probably not. There aren’t any bottom signs out there now; Bollinger Bands
are getting close to oversold, but RSI still has further to fall.
Today, the daily sum of 20 Indicators declined from -5 to
-7(a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations declined from +28 to 6 (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 20 indicators are short-term so they tend to bounce
around a lot.
The Long Term NTSM indicator ensemble
is declining, but remained HOLD: PRICE is Bullish; VOLUME is bearish, VIX &
SENTIMENT are hold.
New-lows increased
significantly and the McClellan Oscillator got worse today, so the Fosback Hi-Lo
Logic Index remained sell.
I reduced stock holdings today by selling my SPY position
at no gain (buy low and sell low) so I had a round trip giving up my gains
(because I didn’t sell sooner), but preventing losses. It still seems like the
markets should not fall much farther, but this is a defensive move to prevent
losses in the 401k. I will sell more if markets continue to fall. Will we have
a “Turning Tuesday” tomorrow? Let’s see what happens.
I am leaning bearish, but maybe not a full-blown Bear
yet.
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
Utilities are the top gainer
over the last 2 months. That’s a bearish sign.
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
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 45% 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.
