“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.
CONSUMER CONFIDENCE (Conference Board)
“The Conference Board Consumer Confidence Index® decreased
in June, following a decline in May. The Index fell to 98.7 (1985=100)—down 4.5
points from 103.2 in May—and now stands at its lowest level since February 2021
(Index, 95.2)...Consumers’ grimmer outlook was driven by increasing concerns
about inflation, in particular rising gas and food prices. Expectations have
now fallen well below a reading of 80, suggesting weaker growth in the second
half of 2022 as well as growing risk of recession by yearend.” Press
release at...
https://www.conference-board.org/press/pressdetail.cfm?pressid=16634
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 2% to 3822.
-VIX rose about 5% to 28.36.
-The yield on the 10-year Treasury slipped to 3.172%.
PULLBACK DATA:
-Drop from Top: 20.3% as of today. 23.6% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 121-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 13.2% BELOW its 200-dMA & 5.5%
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. I am vacationing and I just don’t have time to keep
track of trading positions.
TODAY’S COMMENT:
I heard the NY Fed President, John Williams, speak on CNBC Tuesday. He said that the next hikes would be 50-75 basis points depending on the data, but during the interview he repeated that the Fed needed to rapidly raise rates and said, “we’re far from where we need to be.” My guess is that his commentary spooked markets today and we have the really ugly daily chart as a result. The Consumer Confidence report didn’t help either and Lynn Franco’s comment (Senior Director of Economic Indicators at The Conference Board) referenced growing recession risk by year end – not exactly good news for the markets.
Short term swings are nearly impossible to call (it’s
mostly guesswork), but the Fed & Confidence data may have killed the rally
even though technical signs say otherwise.
Here are a couple of big bear signs: XLU is outpacing the
S&P 500; XLI is underperforming the S&P 500; late-day action (the Smart
Money) suggests selling; the 3-month chart did not break its upper trend line
(although the chart is far from textbook). These are worrisome signs that the
rally may have failed already. Still, short-term indicators are not showing
much change
Today, the daily sum of 20 Indicators remained +10 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -5 to +10. (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 BUY: SENTIMENT, VOLUME, VIX & PRICE are
bullish. That’s a strong bullish signal and the short-term Market Internals
Indicator is bullish too.
I’m a Bear, longer-term, but the indicators are still
suggesting this bounce can go higher. We may find out soon if the news has
derailed the bounce.
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) XLE (3) XLU (4) IBB
*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 30% 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.
