“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.
RETAIL SALES (YahooFinance)
"Treasury yields rose on Tuesday after data showed that
retail sales increased strongly in April, reducing fears that the American
economy is likely to fall into recession as the Federal Reserve aggressively
hikes interest rates. Retail sales rose 0.9% last month.” Story at...
https://finance.yahoo.com/news/treasuries-yields-rise-strong-retail-153555483.html
INDUSTRIAL PRODUCTION / CAPACITY UTILIZATION (Seeking
Alpha)
“April Industrial Production: +1.1% M/M
to +0.4% expected and +0.9% prior (unchanged from prior estimate)...Capacity
Utilization: 79.0% vs. 78.6% consensus and 78.2% prior (revised from
78.3%).” Story at...
LOVING LEMONADE (Heritage Capital)
“...the huge question now is what is ahead. First,
without volatility calming down, it is going to continue to be difficult on
investors. I also think that the stock market is in the bottoming process that
will lead to a 7-12% rally into summer. That puts the S&P 500 into the
range of 4200-4400...I also remain confident that we will not see recession in
2022. I am not yet ready to put my stake in the ground for 2023. If the Fed can
thread the needle or land that jet on a postage stamp like they did in 1994 and
2018, Dow 40,000 is coming in 2023. If not, then we will see a mild recession
like the early 1980s...” Commentary at...
https://investfortomorrow.com/blog/i-do-love-lemonade/
It is not a coincidence that Paul and I agree on the
rally being in the 7-12% range. Those percentages
align with the 50-dMA and the 200-dMA values for the S&P 500.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped rose about 2% to 4089.
-VIX dropped about 5% to 26.09.
-The yield on the 10-year Treasury rose to 2.994%.
PULLBACK DATA:
-Drop from Top: 14.8% as of today. 18.1% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 93-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 8.6% BELOW its 200-dMA & 5.4%
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. We did call the market a “Buy” one day after the recent trading
bottom of 12 May.
MY TRADING POSITIONS:
QQQ*
UWM*
XLE
DOW
*Sell when the markets are overbought.
TODAY’S COMMENT:
As noted previously, we saw some solid bottom signals
Friday with a few more on Monday. Tuesday, we got the follow-thru in higher
prices that confirm the earlier Buy-signals. I’ll trade the rally until we see
an overbought sign.
Today, the daily sum of 20 Indicators remained +9 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from +9 to +21. (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; SENTIMENT, VIX & PRICE are
hold. 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. Tuesday, the markets agreed!
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
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 roughly 45% invested in stocks, but some percentage includes
trading-positions. This is slightly 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.
