“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.
PAYROLL REPORT / UNEMPLOYMENT RATE (YahooFinance)
“U.S. job growth remained robust in April as the
unemployment rate held near its pre-virus low, further underscoring the
still-tight domestic labor market...Non-farm payrolls: +428,000 vs. +380,000
expected and a revised +428,000 in March; Unemployment Rate; 3.6% vs. 3.5%
expected, 3.6% in March...” Story at...
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 0.6% to 4123.
-VIX slipped about 3% to 30.19. (Maybe the Option Players
think we are closer to a bottom?)
-The yield on the 10-year Treasury rose to 3.128%.
PULLBACK DATA:
-Drop from Top: 14% as of today. 14% max. (Avg.= 13% for
non-crash pullbacks)
-Days from Top to Bottom: 86-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 8.1% BELOW its 200-dMA & 5.6%
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:
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 (13-bear and 4-bull). These indicators (totaling 38 today) 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 smoothed advancing volume on the NYSE is rising.
-Smoothed Buying Pressure minus Selling Pressure turned up 6
May, but just barely.
-My Money Trend indicator turned up 6 May.
-The Smart Money (late-day action) is rising. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
NEUTRAL
-Bollinger Bands.
-Overbought/Oversold Index (Advance/Decline Ratio).
-RSI.
-There has been 1 Distribution Day since the last
Follow-Thru Day on 4 May.
-Non-crash Sentiment indicator is neutral.
-The S&P 500 is 6.5% below its 200-dMA (Bear
indicator is 12% above the 200-day.). This value was 15.9% above the 200-dMA
when the 10% correction occurred in Sep 2020. (Bigger bottoms are formed when
the Index is at, or below, the 200-dMA.)
-Issues advancing on the NYSE (Breadth) compared to the
S&P 500 is neutral.
-The 10-dEMA of the Fosback Hi-Low Logic Index is now in
neutral territory.
-There was a Hindenburg Omen signal 8 April – it was
canceled when the McClellan Oscillator turned bullish.
-There have been 9 up-days over the last 20 sessions –
neutral.
-There have been 6 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.
-VIX has been rising, but not enough to give a signal
Friday.
-There was a 90% down volume day 5 May, however, it did
not meet all of the tests required for a Lowry Research bearish-signal. The
close was too high. I’ve seen a comment from a Pro that the correction won’t
end until the S&P 500 has a 90% down-volume day. Maybe yesterday will meet that test even
though it didn’t meet the Lowry test. Either
way, one-day signal is not particularly bearish. I’ll call this neutral.
-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
-3 May, the 52-week, New-high/new-low ratio improved by 1.3
standard deviations; too low to send a signal.
-The graph of the Count (the 100-day sum of up-days) remained
45; the trend still looks flat.
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500, but the trend is down – I’ll put this the neutral category.
-The 1-day Fosback High-Low Logic Index was very bearish
on 21 April. That signal remains in place for 30-days or until the McClellan
Oscillator turns positive. The
Oscillator was positive 4 May so this indicator is neutral.
-49% of the 15-ETFs that I track have been up over the
last 10-days.
BEAR SIGNS
-There have been 8 Statistically-Significant days (big moves
in price-volume) in the last 15-days. This tends to be bearish.
-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 101 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 21 April.
-MACD of S&P 500 price made a bearish crossover 7
April.
-Slope of the 40-dMA of New-highs is falling. This is one
of my favorite trend indicators.
-Short-term new-high/new-low data is falling.
-Long-term new-high/new-low data is falling.
-McClellan Oscillator is negative.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA
are both BELOW the 20-dEMA.
-The S&P 500 is under-performing the Utilities
ETF (XLU) over the last 40 sessions.
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 13 bear-signs and 4-Bull. Last week, there were 17 bear-signs and 4
bull-signs.
Fewer bear-signs is encouraging, but the number of bull-signs
didn’t improve. Further, today’s new-low does not look like a bottom. There
were good signs: (1) volumes were much lower than the extreme volumes we saw at
lows back in early March (2) and Friday’s volume was slightly lower than the 29
April low. The problem remains that breadth remains poor and other internals got
worse.
The Overbought/Oversold Index (Advance-Decline Ratio) called
the next-day move correctly 12-straight times, but not today. It was oversold
yesterday so, according to the indicator, today should have been up. It wasn’t. For the record, it’s not oversold today.
Today, the daily sum of 20 Indicators improved from zero
to +2 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -25 to -20. (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: VOLUME is bearish; PRICE, SENTIMENT & VIX are 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. Only time
will tell...
To reiterate, no bottom yet.
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
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 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.
