“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.
OIL DROPS BELOW $110 ON RECESSION FEARS (OilPrice.com)
“Oil prices dipped by 6 percent early on Wednesday, with
Brent slumping below $110 a barrel, as the market fears a looming recession
would drive down global oil demand...A growing number of analysts and
economists now say that the Fed’s attempts to rein in inflation with aggressive
interest rate hikes may not produce the policy makers’ goal of a “soft landing”
of the U.S. economy and will actually lead to a recession within a year or a
year and a half.” Story at...
https://oilprice.com/Energy/Crude-Oil/Oil-Tumbles-Below-110-As-Fears-Of-Recession-Intensify.html
MORGAN STANLEY SAYS STOCKS COULD DROP ANOTHER 20%
(YahooFinance)
“Morgan Stanley's chief US equity strategist has said the
risks of a recession are rising and that stocks could tumble another 20% if
economic growth goes into reverse. ‘At this point, a recession is no longer
just a tail risk given the Fed's predicament with inflation,’ Mike Wilson, who
was ahead of much of Wall Street in predicting a sharp drop in stocks, said in
a note Tuesday.” Story at...
https://news.yahoo.com/morgan-stanleys-mike-wilson-says-152013474.html
WEDNESDAY – A KEY DAY (Heritage Capital)
https://investfortomorrow.com/blog/wednesday-a-key-day-extreme-bearish-sentiment/
We may have run out of sellers for a while, but are there
any buyers?
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dipped about 0.1% to 3760.
-VIX declined about 4% to 30.19.
-The yield on the 10-year Treasury declined to 3.163%.
PULLBACK DATA:
-Drop from Top: 21.6% as of today. 23.6% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 117-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% 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
held onto SH as a hedge for the portfolio. I am still not overly confident
about this rally. When everyone expects the markets to do something, they
usually do the opposite.
XLE – I added XLE on Tuesday because
it rose 5%+. I must admit I am surprised by the size of the decline Wednesday. Regarding the above article suggesting Oil is
dropping on recession fears, if so, that would cause a lot of sectors to fall,
not just oil. (Consumer Discretionary was only down 0.2% today.) I’m holding my
position to see if the weakness in XLE Wednesday was just profit-taking.
TODAY’S COMMENT:
Short-term Indicators were slightly worse today. As noted above, I am concerned that investors
may not increase buying. We may have run out of sellers for a while, but where
are the buyers? Buyers may be on strike, or more likely, convinced there is a
recession coming. A recession is likely to bring more waves of selling.
Today, the daily sum of 20 Indicators declined from zero
to -2 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations dropped from +12 to -2. (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 remained 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%. We’ll see.
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
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 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.
