“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.
“In those wretched countries where a man cannot call his
tongue his own, he can scarce call anything his own. Whoever would overthrow
the liberty of a nation must begin by subduing the freeness of speech; a thing
terrible to publick traytors.” – Benjamin Franklin.
https://michaelpramirez.com/index.html
ISM MANUFACTURING (ISM)
“Economic activity in the manufacturing sector grew in
April, with the overall economy achieving a 23rd consecutive
month of growth, say the nation’s supply executives in the
latest Manufacturing
ISM® Report On Business®...“The April Manufacturing PMI® registered
55.4 percent, a decrease of 1.7 percentage points from the March reading of
57.1 percent. This figure indicates expansion in the overall economy for the
23rd month in a row after a contraction in April and May 2020. This is the
lowest reading since July 2020...” Report at...
CONSTRUCTION SPENDING (Reuters)
“U.S. construction spending barely rose in March as a
moderate increase in outlays on private projects was partially offset by a
further decline in public spending. The Commerce Department said on Monday that
construction spending edged up 0.1% after increasing 0.5% in February.” Story
at...
https://www.reuters.com/world/us/us-construction-spending-rises-less-than-expected-march-2022-05-02/
REPRICING A MARKET PRICED FOR ZERO – EXCERPT (Hussman
Funds)
“So yes, this time was different, but in a very
dangerous way. Faced with a zero-interest rate world that combined “fear of
missing out” [FOMO] with a belief that “there is no alternative” [TINA] to
yield-seeking speculation, investors unwittingly drove the most reliable stock market
valuation measures to levels beyond the 1929 and 2000 extremes. Unfortunately,
those valuations also imply dismal long-term returns in any world not
permanently dominated by FOMO and TINA psychology. Measured from the recent
bubble peak, the likely consequence will be a long,
interesting, 10-20 year trip to nowhere for the S&P 500. There’s also a
strong possibility of an interim loss in the S&P 500 in the range of 50-70%
over the completion of this market cycle, or as we observed between 2000-2009,
a sequence of cyclical lows punctuated by several extended recoveries.” – John
Hussman, Phd. Commentary at...
https://www.hussmanfunds.com/comment/mc220429/
Yes, a 50-70% drop is very possible, just based on past
history; but it is not certain that such a collapse is happening now. The third
term in the Presidential cycle is often presented with weakness early, followed
by improvement in April-May only to be followed by more weakness in the fall.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.6% to 4155.
-VIX slipped about 3% to 32.34.
-The yield on the 10-year Treasury rose to 2.889%.
PULLBACK DATA:
-Drop from Top: 13.4% as of today. 13.9% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 82-days. (Avg= 30 days top to
bottom for corrections <10%; 60 days top to bottom for larger, non-crash
pullbacks)
The S&P 500 is 7.5% BELOW its 200-dMA & 5.1%
BELOW its 50-dMA.
*We can’t be sure that the correction is over until the
S&P 500 makes a new high; however, we hope to be able to call the bottom.
TODAY’S COMMENT:
Recently, whenever the Overbought/Oversold Index (Advance-Decline
Ratio) has been oversold, the S&P 500 has bounced the next day. It has not
signaled an end to the decline; it has only predicted the move higher for the
next day. This has been true for the last 10-times the Ratio was oversold and I got tired of counting. Yesterday, it was oversold and, voila, today
is an up-day. It was oversold again today, so perhaps we’ll see another up-day
tomorrow.
Today, the daily sum of 20 Indicators declined from zero
to -2 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -8 to -7. (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 remained
HOLD: VOLUME is bearish; PRICE, VIX & SENTIMENT are hold.
The length of this correction could mean that it will go
much lower to match up with previous long corrections – say 20%? This isn’t a
prediction – just a worry. Only time
will tell...
I remain a Bear. I don't see a bottom 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
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 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.
