“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.
https://michaelpramirez.com/index.html
EMPIRE STATE MANUFACTURING (Advisor Perspectives)
“The headline general business conditions index dropped
thirty-six points to -11.6. New orders declined, and shipments fell at the
fastest pace since early in the pandemic.” Commentary at...
CARNAGE OVER (Heritage Capital)
“...the stock market is set up for a face ripping short
covering rally over the coming weeks or so. It is also possible the final
bottom has been seen, but that is not something I am counting on right here.
The Fed can’t pivot yet although they will later this year. Huge asset sales
are still to come...This will not be a “V” bottom like 2020 and 2018 when the
Fed quickly pivoted and “risk on” returned overnight. It is going to take some
time...I still love bonds from earlier this week and that’s the best
risk/reward play for the next few quarters or more. The economy is slowing.” –
Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/carnage-over/
INVESTORS INTELLIGENCE DATA AT BEARISH EXTREME (McClellan
Financial Publications)
“When prices go down, people turn more bearish. It
is a natural human phenomenon, and it is still working during the current price
decline. The useful aspect of this is that when you see an extreme
reading for a sentiment indicator, it is a sign that a bottom is at hand for
prices...
Commentary and Charts at...
MARKET REPORT / ANALYSIS
-Monday the S&P 500 slipped about 0.4% to 4008.
-VIX dropped about 5% to 27.49. (Perhaps the Options
Players suspect there’s a bounce coming?)
-The yield on the 10-year Treasury slipped to 2.883%.
PULLBACK DATA:
-Drop from Top: 16.4% as of today. 18.1% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 92-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 10.5% BELOW its 200-dMA & 7.3%
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:
Friday.
As noted previously, we saw some solid bottom signals
Friday:
-Friday was a bullish, outside-reversal-day. This current
downturn was kicked off by a bearish, outside-reversal-day.
-We saw a Lowry buy-signal as follows: There were 90%
down-volume days 5 May and 9 May; Friday there was a 90%-upside,
volume-reversal. Quoting Lowry Research: "Thus, our 69-year record shows
that declines containing two or more 90% Downside Days usually persist, on a
trend basis, until investors eventually come rushing back in to snap up what
they perceive to be the bargains of the decade and, in the process, produce a
90% Upside Day. – “Identifying Bear Market Bottoms” - Lowry Research.
-The 52-week, New-high/new-low ratio improved by 3.5
standard deviations.
-There were many reports that the number of stocks below
their 200-dMA had reached record levels.
-As noted by Tom McClellan above, Sentiment is exceptionally
bearish. My sentiment indicator is also bullish based on too many bears.
Today.
Monday, we saw High unchanged-volume. Many believe that
this indicator suggests investor confusion at market turning points. Recent
history shows this indicator has indicated a reversal of some kind, either now,
or near future. While it is frequently a false signal, at this point, it seems
to be confirming other indicators.
Monday, there was follow-thru of Friday’s action mid-day,
but that failed in the afternoon. That was disappointing. Usually, I would wait for a strong up-day
that would confirm the buy-signal rather than jump-in early. Not today; I
thought there were enough bull-signs to buy this morning when the markets were
down. We’ll see if that works out...
Today, the daily sum of 20 Indicators improved from +6 to
+10 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from -2 to +10. (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 INDICATOR: The Long
Term NTSM indicator was HOLD: VOLUME is bearish; VIX & PRICE are hold;
SENTIMENT is bullish. 45 days out of the
last 100 have been up-days; that leans bullish.
I’m Bullish in the short-term and Bearish longer-term. I
expect a rally in the 7-11% range from Monday’s close, before the markets
return to selling. Am I right? Who knows, but that’s what the indicators say to
me.
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
My only current trading
position in ETF’s 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
I own: DOW
& CVX. CVX is a long-term hold for me. I’ve owned it forever.
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 roughly 45% invested in stocks, but some percentage includes trading-positions.
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.
