“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
"Today every major network covered the [January 6] hearing, even Fox News. They were like, might as well, all of our anchors are in it anyway.” – Jimmy Fallon.
During periods of market turmoil, my blog readership usually
swells. Not this time – my numbers have been cut in half over the past year. Is it because those Forever-Trumpers
“...can’t handle the truth?” – Meade Stith, Navigate the Stock Market Blog.
EXISTING HOME SALES (NAR)
“Existing-home sales declined for the fourth straight
month to a seasonally adjusted annual rate of 5.41 million. Sales were down
3.4% from April and 8.6% from one year ago.” Story at...
MORE SELLING PRESSURE THIS WEEK (CNBC)
“Bank of America equity strategist Ajay Singh Kapur said
in a note to clients on Friday that it is time for investors to stop fighting
the Fed and give up the buy-the-dip mentality. “In a bear market, heroism is
punished. Valor is unnecessary, and cowardice is called for in portfolio
construction — that is the way to preserve capital and live to fight another
day, waiting for the next central bank panic, and better valuations and a new
earnings upcycle.” Story at...
My cmt: Interesting. As many call for a bounce, the above
piece shows that not everyone agrees.
RARE BEARISH STOCK MARKET SIGNAL SEEN ONLY 10-TIMES IN
THE LAST 95-YEARS (Ciovacco Capital Management)
The signal is an Inverse Zweig Breadth Collapse. This is
the reverse of the Breadth Thrust that I follow. It signals that breadth (the % of issues
advancing on the NYSE) has drastically deteriorated over the recent 10-day
period. This rapid decline signals bad
news for the markets. (Oddly enough, I recorded a bullish Breadth Thrust just 2-weeks
ago. We also had bearish reversals in volume with recent consecutive 80%-up
volume days followed by three 90% down volume days 9-16 June. The bearish
volume signals suggest the decline will continue until we see a 90% up-volume
day.)
The following chart from Ciovacco Capital shows drawdowns
that occurred in the past after an Inverse Zweig Thrust. It suggests the
markets are susceptible to further significant declines. The right-hand column
shows hypothetical levels in the S&P 500 if the 1-year drawdown column
occurred now.
While the past signs occurred years ago, Chris Ciovacco
points out that this signal is based on human behavior and that behavior hasn’t
changed over the years, i.e., the signal is still relevant. Chris also points
out that with markets oversold, a bullish reversal is also possible – stay
nimble.
For Chris Ciovacco’s power-point discussion and market
analysis see...
https://www.youtube.com/watch?v=50MI6s3vUd4
WE’RE GETTING CLOSER TO A BOTTOM – OPPENHEIMER (Seeking
Alpha)
“The stock market is 70% of the way to a bottom,
according to Oppenheimer's technical analysis team.
"In regard to our Market Bottom Checklist, 7 of 10
indicators reached 'at a minimum' thresholds, but aren’t as deeply extreme
as years like 2009 or 2020," analyst Ari Wald said in a note.”
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 2.5% to 3765.
-VIX dipped about 3% to 30.19.(Not much for a 2.5% gain
in price.)
-The yield on the 10-year Treasury rose to 3.285%.
PULLBACK DATA:
-Drop from Top: 21.5% as of today. 23.6% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 116-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 14.8% 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.
MY TRADING POSITIONS:
SH – Proshares Short ETF. I
wanted to close this out today, but I got involved in other efforts during the
day away from home. (I never trade on the cellphone.) This is a smaller
position. I will establish a larger
position, possibly as early as Friday.
XLE – I did manage to repurchase
XLE (Energy Select ETF) today. I’ll hold
this for 5-10 days.
TODAY’S COMMENT:
Previous rallies in this downturn have lasted 5 -10
sessions. While there are some new bullish signs, the markets have not
bottomed, either from a technical or news viewpoint. It is unlikely that markets
will bottom until the Fed reverses course in its rate hikes or at least
announces a pause in Quantitative Tightening (reducing its balance sheet).
Today, the daily sum of 20 Indicators improved from -1 to
zero (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations dropped from +25to +12. (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 improved to HOLD: SENTIMENT is bullish; PRICE and VIX are neutral;
VOLUME is bearish.
I’m a Bear, but it appears that the bounce/rally has
started. Based on recent rallies, we can
guess that it may last 5-10-Days & show a gain of 5-10%.
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.
XLE is still the top momentum ETF, however, all of the ETFs are now below
their 120-dMAs and the chart blows up when that happens.
*For additional background on
the ETF ranking system see NTSM Page at…
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 35% invested in stocks.
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.
