“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.
NEW HOME SALES (money.yahoo)
“New home sales dropped for the fourth straight month in
April, offering up another sign that the housing market is starting to slow. The
volume of new single‐family home sale fell...16.6% from the March rate and
26.9% lower than the rate a year ago.” Story at...
https://money.yahoo.com/new-home-sales-plunge-cooling-housing-market-154050122.html
IHS MARKIT COMPOSITE PMI (S&P Global Intelligence)
“Latest ‘flash’ PMI™ data from S&P Global indicated a
slower expansion in business activity across the US private sector during May.
Manufacturers and service providers signaled softer upturns in output amid
elevated inflationary pressures, a further deterioration in supplier delivery
times and weaker demand growth. The headline Flash US PMI Composite Output
Index registered 53.8 in May, down from 56.0 in April...” Press release at...
https://www.markiteconomics.com/Public/Home/PressRelease/b669b93cb25f4270952e1d9a03be464e
A BIG BEARISH
WORRY (NTSM)
If investors were confident, they wouldn’t be buying Utilities like they have been recently. The red line below zero means XLU is outperforming the S&P 500. The falling line indicates it is getting worse.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 FELL about 0.8% to 3941.
-VIX rose about 3% to 29.45.
-The yield on the 10-year Treasury rose to 2.763% as of
this post.
PULLBACK DATA:
-Drop from Top: 17.8% as of today. 18.7% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 98-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 11.7% BELOW its 200-dMA & 8.2%
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...
MY TRADING POSITIONS:
QQQ*
UWM*
XLE
DOW
*Sell when the markets are overbought or if the bounce
makes it to the 50-dMA.
TODAY’S COMMENT:
I would have preferred a positive day today, but there
were some bright spots. Tuesday’s close was above Thursday’s intra-day low and
was well above last week’s closes on Wednesday, Thursday and Friday; MACD made
a bullish crossover today; My Money Trend indicator is headed in a bullish
direction; RSI is overbought; Sentiment remained bullish and my late-day-action
indicator is overbought. These triggered my “Bottom Indicator”, although this
is an alarm rather than a clear “Buy” signal.
All-in-all, I am not going to panic over my trades, yet...still
waiting for that rally.
Today, the daily sum of 20 Indicators improved from +10
to +11 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from +30 to +40. (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: VIX is bearish; SENTIMENT was bullish; VOLUME and
PRICE are hold. 44 days out of the last
100 have been up-days; that leans bullish.
I am cautiously Bullish in the short-term and Bearish
longer-term. I expect a rally in the 7-9% range. 4300 is as good a target as
any: it would be a 50% retracement and it is also currently the 50-dMA.
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 that I will exit if a rally fails to materialize. 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.
