“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.
The NYSE is closed Friday for the holiday. Have a happy Easter and a Happy Passover!
RETAIL SALES (Fox Business)
“Retail sales, a measure of how much consumers spent on a
basket of goods ranging from cars to food and gasoline, rose 0.5% in March from
the prior month, the Commerce Department said Thursday. Economists surveyed by
Refinitiv expected sales to rise 0.6%. It marked a noted slowdown from the
upwardly revised 0.8% gain in February.” Story at...
https://www.foxbusiness.com/economy/retail-sales-march-2022-inflation
JOBLESS CLAIMS (Yahoo Finance)
“U.S. jobless claims held near multi-decade lows last
week as companies worked to keep employees on their payrolls amid ongoing labor
shortages... Initial
jobless claims, week ended April 9: 185,000 vs. 170,000
expected...” Story at...
https://finance.yahoo.com/news/weekly-jobless-claims-week-ended-april-9-2022-174045858.html
UNIV OF MICHIGAN SENTIMENT (Morningstar)
“Consumer sentiment in the U.S. unexpectedly rose at the
beginning of April as expectations for the economy and personal finances
improved, but it remained at decade-low levels.
The preliminary estimate of the consumer sentiment index
released Thursday by the University of Michigan stood at 65.7 in April, up from
59.4 in March...” Story at...
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.2% to 4393.
-VIX rose about 4% to 22.7.
-The yield on the 10-year Treasury rose to 2.830%.
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: 71 (Avg= 60 days top to bottom for
>10% non-crash pullbacks)
Drop from Top: Now 8.4%. Max at close: 13%
The S&P 500 is 2.3% BELOW its 200-dMA & 0.6% BELOW
its 50-dMA.
*We can’t call the end of the correction until the
S&P 50 makes a new high.
TODAY’S COMMENT:
On Fridays, I summarize a number of indicators to get a
weekly feel for trend. This week, Thursday is week end. Overall, the end-of-week
summary remained sharply to the Bear side (16-bear and 6-bull). These
indicators (totaling 37 today) 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
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 29 March. It remains just barely bullish.
-Long-term new-high/new-low data is rising.
-The size of up-moves has been larger than the size of
down-moves over the last month, but just barely.
-Slope of the 40-dMA of New-highs is up. This is one of
my favorite trend indicators.
-There have been only 45 up-days in the last 100 sessions.
That’s a bullish sign unless this really is a bear market. We might expect this number to fall further
in a bear market.
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500.
NEUTRAL
-There have been 5 Distribution Days since the last
Follow-Thru Day - not quite bearish.
-There have been 2 Statistically-Significant days (big
moves in price-volume) in the last 15-days.
-The S&P 500 is 2.3% below 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.
- Overbought/Oversold Index (Advance/Decline Ratio)
- Issues advancing on the NYSE (Breadth) vs the S&P
500 is neutral.
-There have been 5 up-days over the last 20 sessions –
neutral.
-There have been 4 up-days over the last 10 sessions– leaning
bullish, but neutral.
-VIX has been falling, but not enough to give a signal.
-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.
-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.
BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is below 50%.
-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 86 consecutive days. (3 days in a row is my bear signal)
-Smoothed Buying Pressure minus Selling Pressure is falling.
-MACD of S&P 500 price made a bearish crossover 7
April.
-My Money Trend indicator is still headed down, but the
rate of fall is slowing.
-Short-term new-high/new-low data is falling.
-There was a Hindenburg Omen signal 8 April.
-The Fosback High-Low Logic Index was very bearish on 25
March. That signal remains in place for 30-days.
- McClellan Oscillator. The Oscillator is negative.
-The Smart Money (late-day action) is falling. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA
are both BELOW the 20-dEMA.
-The S&P 500 is under-performing the Utilities
ETF (XLU) over the last 40 sessions (by a lot). This remains troubling.
-45% of the 15-ETFs that I track have been up over the
last 10-days.
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 16 bear-signs and 6-Bull. Last week, there were 14 bear-signs and 6
bull-signs.
I’ve re-worked my calculations for the determining the Fosback
New-High/New-Low Logic Index. The news is both good and bad. After refining my
calculations, I don’t see the crash warning that was evident in my 10-week EMA
for the Logic Index recently, however, there was a daily warning on 25 March
and 17 March with the Index reaching 5.1% and 5.5% respectively. Per J. Lyons Fund Management, that 1-day
warning is a very bearish sign. While
the chart below is a little dated, the conclusion is the same – the 1-day value
has been bearish near major tops.
Today, 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 -26 to -36 (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.
Wednesday, buyers moved in and the markets rose all day. We
didn’t get the high up-volume follow-thru Thursday that I had hoped for - we
didn’t even see an up day.
The S&P 500 didn’t hold its 50-dMA Thursday, so I
decided to trim stock positions again.
The only trading-position that I am still holding is the Energy ETF,
XLE.
The Long Term NTSM indicator
ensemble is mixed, but remained HOLD: PRICE is Bullish; VOLUME is bearish;
SENTIMENT & VIX are hold.
With the S&P 500’s failure to hold the 50-dMA, I am now
a Bear. That may change quickly if earnings turn out ok and the markets turn up. For now, indicators are solidly 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.
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.
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.
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.
