“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.
DURABLE ORDERS (Bloomberg)
“Orders placed with US factories for durable goods rose
more than expected in May, suggesting business investment so far remains firm
even in the face of rising interest rates and mounting concerns about the
economy. Bookings for durable goods -- items meant to last at least three
years -- increased 0.7% in May...” Story at...
PENDING HOME SALES (FoxBusiness)
“Pending home
sales unexpectedly broke a six-month streak of declines in May,
climbing 0.7% to a reading of 99.9, according to the National Association of
Realtors.” Story at...
ARE STOCKS FORMING A BOTTOM (Ciovacco Capital)
Graphic from Ciovacco Presentation at...
https://www.youtube.com/watch?v=Z6F9AN2cj7k
I think the bottom line for the presentation was that a
downside of another 6-9% is still possible, however, markets are trying to form a
bottom. That process may take several months. If we have a recession, all bets
are off and significant further downside is possible.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 slipped about 0.3% to 3900.
-VIX fell about 1% to 26.95.
-The yield on the 10-year Treasury rose to 3.210%.
PULLBACK DATA:
-Drop from Top: 18.7% as of today. 23.6% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 120-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 11.4% BELOW its 200-dMA & 3.8%
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:
None
TODAY’S COMMENT:
After the big move higher Friday, it’s not surprising to
see some profit taking Monday. Internals were generally positive and more bullish
signs are popping up. This all suggests
that, absent more bad news, this market can keep going higher; but it still looks
like a counter-trend rally and not a permanent change in direction.
Today, the daily sum of 20 Indicators improved from +9 to
+10 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from -17 to -5. (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 switched to BUY: SENTIMENT, VOLUME & PRICE are bullish;
VIX is neutral. This may indicate that the rally may be larger than I expected.
I’m a Bear, longer-term, but this bounce can go higher. 4%
higher seems easy; it is not likely that it will reach the 200d-MA (11% higher), but
it’s not out of the question. Still, this bear market isn’t over yet.
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs
(Ranked Daily)
All of the ETFs I track are
below their 120-dMAs, so my chart methodology is not valid. Top three ETF
ranking follows:
(1) XLV (2)
XLU (3) IBB (4) XLE
*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
MONDAY 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.
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.
