“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
CASS TRANSPORTATION REPORT (CASS Information Systems)
“U.S. freight volumes fell in April from March and the year-ago
period. And with more difficult comparisons in the next few months as global
supply chain disruptions are set to intensify, more softness is on the horizon.
The shipments component of the Cass Freight Index fell 0.5% y/y, following a
0.6% y/y increase in March. The shipments component of the Cass Freight Index
fell 2.6% from March, and this was 0.9% below the normal seasonal pattern.
...The prospect of freight recession is now considerable,
as substitution from goods back to services spending picks up pace, and as
inflation slows overall spending, particularly via higher fuel prices and by
pressing up interest rates.” Report at...
https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/april-2022
NASTY DECLINE [WEDNESDAY] BUT NOT THE END OF THE WORLD
(Heritage Capital)
“Oftentimes, we after an initial low, we see prices surge
and then immediately come back to revisit those prices within a few a days or
so...If I am wrong then the stock market should unravel right away and
accelerate lower. In that case I will obviously reassess.” – Paul Schatz,
President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/nasty-decline-but-not-the-end-of-the-world/
The markets haven’t unraveled so I’d guess that Mr.
Schatz remains in agreement with me – a rally is likely.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was unchanged at 3901. (It was
down until mid-day and then rallied nearly 100 pts all afternoon.)
-VIX rose about 0.1% to 29.43.
-The yield on the 10-year Treasury slipped to 2.785%.
PULLBACK DATA:
-Drop from Top: 18.7% as of today. 18.7% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 96-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 & 9.3%
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,,
but Monday will be the deciding day.
MY TRADING POSITIONS:
QQQ*
UWM*
XLE
DOW
*Sell when the markets are overbought. The was a
decent recovery in the afternoon Friday – we need to see follow-thru Monday. I’ll
be out of these if the S&P 500 doesn’t have a good day Monday.
TODAY’S COMMENT:
I measure Sentiment as %-Bulls (Bulls/{bulls+bears})
based on the amounts invested in selected Rydex/Guggenheim mutual funds. My
Sentiment indicator was Bullish at the close Thursday. (I won’t get today’s numbers until late tonight.)
This indicator was also bullish 2 months ago and the S&P 500 responded with
a 5% rally before resuming its fall.
Today, there was 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. My problem is that it is frequently a false signal. At this
point if the indicator is sending a decent signal, the direction of reversal
would be up.
Three days ago, all 30 Dow stocks were down; yesterday,
20% were up; today, 53% were up. This trend needs to continue!
On Fridays, I summarize a number of indicators to get a
weekly feel for trend. Overall, the end-of-week summary remained well to the
Bear side (15-bear and 6-bull). These indicators tend to be both long-term and
short-term, so they are different than the 20 that I report on daily. Details
follow:
BULL SIGNS
-Non-crash Sentiment indicator.
-McClellan Oscillator is positive.
-The S&P 500 is 12.7% below its 200-dMA. (Bull
indicator is 12% below the 200-day.)
-The 5-dEMA of the Fosback Hi-Low Logic Index is bullish.
-The 52-week, New-high/new-low ratio improved by 3.5
standard deviations on 13 May. It is still in effect.
- Buying Pressure minus Selling Pressure turned up 20 May,
but just barely.
NEUTRAL
-There were 90% down-volume days 5 May and 9 May followed
by a 90%-upside, volume-reversal last Friday. That was very bullish, but there
was a 90% down-volume day Wednesday and that cancels the prior bullish signal.
-Friday a week ago was a Bullish Outside Reversal Day -
expired.
-Short-term new-high/new-low data is flat.
-The Smart Money (late-day action) is flat. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-Issues advancing on the NYSE (Breadth) compared to the
S&P 500 was neutral.
-Bollinger Bands.
-Overbought/Oversold Index (Advance/Decline Ratio).
-RSI.
-There have been 4 Distribution Days since the last
Follow-Thru Day on 4 May.
-There was a Hindenburg Omen signal 8 April – it was
canceled when the McClellan Oscillator turned bullish.
-There have been 10 up-days over the last 20 sessions –
neutral.
-There have been 4 up-days over the last 10 sessions –
neutral.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to send a signal.
-The Calm-before-the-Storm/Panic Indicator.
-2.8% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high, 3 January. (There is no
bullish signal for this indicator.) This indicated that the advance was too
narrow and a correction was likely to be >10%. – It proved correct, but is
now Expired
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500, but the trend is down – I’ll put this the neutral category.
-There have been 4 Statistically-Significant days (big moves
in price-volume) in the last 15-days.
BEAR SIGNS
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is below 50%.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is below 50%.
-The 100-dMA % of issues advancing on the NYSE
(Breadth) is below 50%
-The 50-dMA % of issues advancing on the NYSE (Breadth)
has been below 50% for more than 100 consecutive days. (3 days in a row is my “correction-now”
signal)
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 20 May. It was bullish earlier this week.
-MACD of S&P 500 price made a bearish crossover 7
April.
-Long-term new-high/new-low data is falling.
-My Money Trend indicator is falling.
-The smoothed advancing volume on the NYSE is falling.
-Slope of the 40-dMA of New-highs is falling. This is one
of my favorite trend indicators.
-VIX has been rising sharply.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA
are both BELOW the 20-dEMA.
-The graph of the 100-day Count (the 100-day sum of
up-days) was 44, up from 43 yesterday, but the chart trend is sharply down.
-The S&P 500 is under-performing the Utilities
ETF (XLU) over the last 40 sessions.
-47% of the 15-ETFs that I track have been up over the
last 10-days.
On Friday, 21 February, 2 days after the top before the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there
are 15 bear-signs and 6-Bull. Last week, there were 12 bear-signs and 9
bull-signs.
Today, the daily sum of 20 Indicators dropped from -3 to
+2 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations declined 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 SELL: VOLUME and VIX are bearish; SENTIMENT & PRICE
are hold. 44 days out of the last 100
have been up-days; that leans bullish. If the sentiment data I get tonight is
bullish, then the indicator will be HOLD. In any event, I will be a seller of
my trading positions (UWM, QQQ) on Monday unless there is some bullish action Monday.
I am cautiously Bullish in the short-term and Bearish
longer-term. I expect a rally in the 7-9% range Am I right? I haven’t been yet.
Today’s action was bullish since the Indices moved up all afternoon. If markets
follow thru to the upside on Monday – good. If not, I’ll turn bearish.
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
FRIDAY 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.
