“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.
“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.
JOBLESS CLAIMS (CNBC)
“New claims for U.S. unemployment benefits unexpectedly
rose last week, but the labor market remains tight amid worker shortages, with
the number of Americans on jobless rolls at its lowest since 1969 in early May.
Initial claims for state unemployment benefits increased
21,000 to a seasonally adjusted 218,000 for the week ended May 14...” Story at...
PHILADELPHIA FED INDEX (Philadelphia FED)
“The diffusion index for current activity fell 15 points
to 2.6 in May, its lowest reading in two years... Responses to the May Manufacturing Business Outlook
Survey suggest continued overall expansion for the region’s
manufacturing sector. Although the indicator for current activity fell, the new
orders and shipments indexes rose. The firms continued to indicate overall
increases in employment and widespread increases in prices paid and received.
The survey’s future indexes suggest muted optimism for growth over the next six
months.” Press release at...
https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/mbos-2022-05
LEADING ECONOMIC INDEX (Conference Board via
prnewswire.com)
“The Conference Board Leading Economic Index® (LEI)
for the U.S. decreased by 0.3 percent in April to 119.2 (2016 = 100), following
a 0.1 percent increase in March. The LEI is now up 0.9 percent over the
six-month period from October 2021 to April 2022. "The US
LEI declined in April largely due to weak consumer expectations and a drop in
residential building permits," said Ataman Ozyildirim, Senior Director of
Economic Research at The Conference Board. "Overall, the US LEI was
essentially flat in recent months which is in line with a moderate growth
outlook in the near-term.” Press release at...
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dropped about 0.6% to 3901.
-VIX fell about 5% to 29.35. (The Options Crowd suspects
the markets are overdue for a rally?)
-The yield on the 10-year Treasury slipped to 2.893%,
compared to this time yesterday.
PULLBACK DATA:
-Drop from Top: 18.7% as of today. 18.7% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 95-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 12.7% BELOW its 200-dMA & 9.5%
BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500
makes a new-high; however, we hope to be able to call the bottom when we see
it...and... we did call the market a trading “Buy” one day after the recent
trading bottom on 12 May...
...I still think we are at or very near a trading bottom.
MY TRADING POSITIONS:
QQQ*
UWM*
XLE
DOW
*Sell when the markets are overbought.
TODAY’S COMMENT:
General Mills, a consumer staples company selling
consumer foods in a number of categories, was down 2.1% today. Its PE is 17.7. I suppose investors are now afraid that’s too
expensive for safe haven. Is the money previously invested in consumer staples going
back into the market or into cash? We can’t say, but the Russell 2000 was up
today and Market Internals were good too.
Advancing issues outpaced decliners and almost 60% of the
volume on the NYSE was advancing volume. New-lows improved a little compared to
Wednesday and was about one-third of the new-lows at the low a week ago.
This all suggests the markets are closer to a bottom and
I think there is still a rally in the works.
Today, the daily sum of 20 Indicators dropped improved from -3 to +2
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations declined improved from +19 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 and VIX are bearish; PRICE is hold;
SENTIMENT is bullish. 43 days out of the
last 100 have been up-days; that leans bullish. This indicator is nearly
“sell”, but I don’t think this is the time to sell.
I am cautiously Bullish in the short-term and Bearish
longer-term. I expect a rally in the 7-9% range, before the
markets return to selling. Am I right? We’ll see. It looked like the markets
were ready to rebound today, before they sold off late. Tomorrow may be
telling.
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 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.
