“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.
From...
https://michaelpramirez.com/index.html
NFIB SMALL BUSINESS OPTIMISM (NFIB)
“The NFIB Small Business Optimism Index was
unchanged in April, remaining at 93.2 and the fourth consecutive month below
the 48-year average of 98. Small business owners expecting better business
conditions over the next six months decreased one point to a net negative 50%,
the lowest level recorded in the 48-year-old survey.” Press release at...
HOUSE DEMOCRATS TAX PLAN DISASTER FOR SMALL BUSINESSES
(NFIB)
“As usual, the White House offered platitudes this month at
the start of Small Business Week. Small businesses are the ‘engines of our
economic progress.’ The ‘pillars of their neighborhoods.’ And so on. But a few
days later, the House of Representatives, with the White House’s backing,
announced one of the most dramatic assaults on small business in decades.
Lawmakers unveiled a massive tax-hike package that would jam those ‘engines of
our economic progress’ and topple many of those ‘pillars of their
neighborhoods.’” - NFIB President Brad Close. Press release at...
THE BAD THINGS QT3 WILL BRING (McClellan Financial
Publications)
“The Federal
Reserve announced on May 4, 2022 that it would start to reduce
its holdings of Treasury securities and mortgage-backed securities (MBS)
beginning on June 1, 2022. Their plan is to sell off $30 billion of
Treasuries and $17.5 billion of MBS every month from June through August.
Then in September they plan to ramp up to double those amounts every
month. This will not be bullish at all for the stock market, based on our
collective past experience with instances when the Fed has tried to do this
before...In an ideal scenario, we would just get rid of the FOMC, and outsource
interest rate policy to the 2-year T-Note yield. That would save a lot on
travel costs for the FOMC members, and it would arguably get us a much better
result.” Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/the_bad_things_that_qt3_will_bring/
INVESTOR SENTIMENT IS SO BEARISH – IT’S BULLISH (RIA)
“’If everybody’s optimistic, who is left to buy? If
everybody’s pessimistic, who’s left to sell?’ - Sam Stovall, the investment
strategist for Standard & Poor’s...
...The takeaway from this commentary is not to let media
headlines, financial narratives, or concerns over long-term issues like
valuations, economics, or geopolitical events impact the decision-making
process in your portfolio strategy...The next few weeks, and even the next
couple of months, will likely be frustrating. Markets are likely to remain
rangebound with little progress made for either the bulls or the bears. We are
maintaining our exposures to higher-than-normal levels of cash and underweight
both equities and bonds.” Commentary at...
https://realinvestmentadvice.com/investor-sentiment-is-so-bearish-its-bullish/
My sentiment 5-day numbers are 88%-bulls
(Bulls/{bulls+bears}) based on the amounts invested in selected
Rydex/Guggenheim mutual funds. While that seems very bullish, currently, below 85%
is my “Buy” signal and I am much closer to a “Buy” than a “Sell.”
ANOTHER DEAD RUSSIAN OLIGARCH (msn.com)
“Subbotin, the former top manager of Russian energy company
Lukoil, is the latest of several Russian oligarchs to die in a suspicious manner amid Russia's invasion of
Ukraine...His death comes just months after Lukoil called for a quick end to
the war between Russia and Ukraine. ” Story at...
Russian
Oligarch Found Dead Under Mysterious Circumstances (msn.com)
Highly likely that Putin is killing them off. I heard an interview
with a Russian woman at the May-Day Parade in Moscow. She praised Putin for keeping Russia out of a
war. Apparently, none of her neighbors told her that their children in the
military seem to have vanished.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.2% to 4001.
-VIX dropped about 5% to 32.99.
-The yield on the 10-year Treasury was 3.082% at 5:50pm.
PULLBACK DATA:
-Drop from Top: 16.6% as of today. 16.8% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 88-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 10.8% BELOW its 200-dMA & 8.1%
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
when we see it.
TODAY’S COMMENT:
“50% of the NASDAQ is down 50%.” – Josh Brown, CNBC.
Today was very likely a “Buy.” Given all of the issues facing
the markets it may not be a long-term buy.
Historically, the third year of a Presidential term tends to bottom in
the fall, but there are bullish signs now.
These bullish signs remain: (1) RSI is oversold (2) The
Overbought/Oversold Index (advance decline ratio) is oversold (3) My analysis
of the late day action shows an oversold condition. Bollinger Bands flipped to
neutral.
Today, the daily sum of 20 Indicators improved from -3 to
+1 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from -17 to -12. (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.
LONG-TERM INDCATOR: The Long
Term NTSM indicator was HOLD: VOLUME & PRICE are bearish; VIX &
SENTIMENT are hold. 45 days out of the
last 100 have been up-days; that leans bullish.
Today was a wild one as the
S&P 500 bounced between positive and negative values. The final result
looked bullish, but once again, not slam-dunk bullish. For a retest, we want to
see a lower-low. Today’s low, was not quite
a lower-low, so some would argue that Tuesday’s close should be ignored. They may be right, but Tuesday’s close was
only 0.25% above yesterday’s low and the internals looked more like values at a
low than not. Comparing internals, we find that internals improved and the
volume was lower compared to the low yesterday. That’s what we need to see. Improving volume suggests reduced selling
pressure and improving internals suggest an improving underlying stock
market. The markets may have made a bottom
Tuesday, though it may not be a long-term bottom. If I am right, there should
be a nice bounce Wednesday. My confidence level is not high; futures are down
as I write this.
My plan is to take a trading
position tomorrow (assuming the markets are positive) until the markets either
confirm or reject my hypothesis. Confirmation would be a strong move up.
We’ll see...
I’m a BULL, but I have to admit that position will
not last long if the markets don’t make a strong move up tomorrow.
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
My only current trading
position is in the Energy XLE-ETF.
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
TUESDAY 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’ll up the stock holding Wednesday depending
on market action. I’ll probably move to
40-45% in stocks as a % of the total portfolio.
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.
