“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.
FOMC RATE DECISION (CNBC)
“The central bank raised its benchmark interest rate by
half a percentage point on Wednesday. Powell said at a press conference that
50-basis-point increases are under consideration in the next two meetings.
However, he said a 75-basis-point hike is not on the table for now.” Story
at...
https://www.cnbc.com/2022/05/04/us-bonds-treasury-yields-rise-ahead-of-big-fed-rate-decision.html
ADP EMPLOYMENT CHANGE (YahooFinance)
“Private sector employment increased by 247,000 jobs from
March to April according to the April ADP® National Employment ReportTM...’In April, the labor
market recovery showed signs of slowing as the economy approaches full
employment,’ said Nela Richardson, chief
economist, ADP. ‘While hiring demand remains strong, labor supply shortages
caused job gains to soften for both goods producers and services providers.’”
Story at...
https://finance.yahoo.com/news/adp-national-employment-report-private-121500824.html
ISM NON-MANUFACTUIRNG INDEX (prnewswire)
"The April Manufacturing PMI® registered
55.4 percent, a decrease of 1.7 percentage points from the March reading of
57.1 percent. This figure indicates expansion in the overall economy for the
23rd month in a row after a contraction in April and May
2020. This is the lowest reading since July
2020 (53.9 percent).” Story at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 1.3 million barrels from the
previous week. At 415.7 million barrels, U.S. crude oil inventories are about
15% below the five year average for this time of year.” Story at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
MARKET NOT SATISFIED UNTIL EVERYBODY LOSES (CNBC via
msn.com)
The
market is not satisfied until everybody loses, says Ritholtz's Josh Brown |
Watch (msn.com)
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 3% to 4300.
-VIX dropped about 13% to 25.42.
-The yield on the 10-year Treasury slipped to 2.937%.
PULLBACK DATA:
-Drop from Top: 10.3% as of today. 13.9% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 84-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 4.3% BELOW its 200-dMA & 1.7%
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.
TODAY’S COMMENT:
Markets jumped after Powell said the committee wasn’t
considering a 75-basis point hike...Happy Days are here again! We noted
yesterday that a bounce higher after the meeting was likely, but today’s bounce
was higher than I anticipated. While
many are calling for a big bounce higher I am skeptical – we’ll see.
I noted recently that whenever the Overbought/Oversold
Index (Advance-Decline Ratio) has been oversold, the S&P 500 has bounced
the next day. As of today, this indicator has called the next-day move
correctly 12-straight times. Wednesday, the oversold condition cleared, so we don’t
have an indication for tomorrow, at least not with this indicator. Another,
suggests a down-day for tomorrow.
Today was a statistically significant up-day. That just means
that the price-volume move exceeded my statistical parameters. Statistics show
that a statistically-significant, up-day is followed by a down-day about 60% of
the time.
Today, the daily sum of 20 Indicators improved from -2 to
zero (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations declined from -9 to -15. (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.
The Long Term NTSM indicator
remained HOLD: VIX is bullish; VOLUME & PRICE are bearish; SENTIMENT is
hold.
The length of this correction could mean that it will go
much lower to match up with previous long corrections – say 20%? This isn’t a
prediction – just a worry. Plenty of bear signs still out there...
...The last retest of the low was unsuccessful – volumes were
higher at the retest suggesting more fear during the decline. The Fed gave more
clarity today, but they didn’t solve any problems.
No bottom yet, but I’ll keep watching to see if there are
any buy-signals tripped if we do get a big, sustained move higher.
For now, I remain a Bear.
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
My only current trading
position is in the Energy XLE-ETF.
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
WEDNESDAY 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 about 35% invested in stocks. This is 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.
