“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.
"I believe this [move to green energy] is a 30-40
year transition and I think that everybody else that is run by NGOs [non-profit/non-Governmental
organization] and some teenagers believes that we can just flip a switch and
move to alternative energy...We need some adults in the room to map out a plan
for energy transition." – Kyle Bass, founder of Conservation Equity
Management, a TX-based private equity firm focused on environmental
sustainability.
PERSONAL INCOME / SPENDING (rttnews)
The Commerce Department released a report on Friday
showing personal income in the U.S. increased by slightly less than expected in
the month of April.
The report showed personal income rose by 0.4 percent in
April... Meanwhile, the report said personal spending advanced by 0.9 percent
in April...” Story at...
PCE PRICES (CNN)
“The price index measuring Personal Consumption
Expenditures rose by 6.3% year over year in April, the Commerce Department reported Friday. It was a decrease
from March, when prices rose by 6.6%, and the first slowing of price
hikes since
November 2020.” Story at...
https://www.cnn.com/2022/05/27/economy/pce-inflation-prices-april/index.html
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 2% to 4158.
-VIX fell about 6% to 25.5.
-The yield on the 10-year Treasury declined to 2.745%.
PULLBACK DATA:
-Drop from Top: 13.3% as of today. 18.7% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 101-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 6.7% BELOW its 200-dMA & 2.8%
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 make it to the 50-dMA. I may break
this rule too...we’ll see. I still suspect this is just a Bear Market Rally.
TODAY’S COMMENT:
Friday, up-volume was 87%, so that makes 3 consecutive
days that up-volume exceeded 80%. Bullish, to say the least. Can’t say that I
recall such bullish action at any time in the past.
On Fridays, I summarize a number of indicators to get a
weekly feel for trend. Overall, the end-of-week summary reversed to the Bull side
(8-bear and 13-bull). Many of the Bear signs are trend following so it is
natural to see those bear signs remain. 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
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is above 50%.
-McClellan Oscillator is positive.
-There were back-to-back-to-back 80% up-volume days
Wednesday, Thursday and Friday.
-Buying Pressure minus Selling Pressure turned up 20 May.
-Short-term new-high/new-low data is rocketing higher.
-The Smart Money (late-day action) is headed up. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 24 May.
-MACD of S&P 500 price made a bullish crossover 23
May.
-My Money Trend indicator is screaming higher.
-The smoothed advancing volume on the NYSE is rising.
-65% of the 15-ETFs that I track have been up over the
last 10-days.
-Non-crash Sentiment indicator is too Bullish and that’s Bearish
(as of Thursday’s close).
-The graph of the 100-day Count (the 100-day sum of
up-days) was 46, up from 45 yesterday, and the chart trend has jumped higher.
NEUTRAL
-The S&P 500 is 6.7% below its 200-dMA. (Bull
indicator is 12% below the 200-day.)
-The 52-week, New-high/new-low ratio improved by 3.5
standard deviations on 13 May. - Expired.
-The 5-dEMA of the Fosback Hi-Low Logic Index.
-Friday a week ago was a Bullish Outside Reversal Day -
expired.
-Issues advancing on the NYSE (Breadth) compared to the
S&P 500 was neutral.
-Bollinger Bands.
-RSI.
-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.
-There have been 5 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 11 up-days over the last 20 sessions –
neutral.
-There have been 6 up-days over the last 10 sessions –
neutral.
-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 2 Statistically-Significant days (big
moves in price-volume) in the last 15-days.
-The S&P 500 is under-performing the Utilities
ETF (XLU) over the last 40 sessions, but it is headed sharply higher – Neutral for
now.
BEAR SIGNS
-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)
-Overbought/Oversold Index (Advance/Decline Ratio).
-Slope of the 40-dMA of New-highs is falling. This is one
of my favorite trend indicators.
-VIX has been rising on a longer-term basis.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA
are both BELOW the 20-dEMA.
-Long-term new-high/new-low data is falling.
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 8 bear-signs and 13-Bull. Last week, there were 15 bear-signs and 6
bull-signs.
Today, the daily sum of 20 Indicators improved from +14
to +15 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from +67 to +76. (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 bullish; VIX is bearish; SENTIMENT and
PRICE are hold. Only 46 days out of the
last 100 have been up-days; that leans bullish.
I am Bullish in the short-term and Bearish longer-term. I
expect a rally in the 7-9% range. Around 4300 is as good a target as any. We’ll
see when we get there.
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 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.
