“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 (CNBC)
“The U.S. economy added 390,000 jobs in May, better than
expected despite fears of an economic slowdown and with a roaring pace of
inflation, the Bureau of Labor Statistics reported Friday. At the same time,
the unemployment rate held at 3.6%, just above the lowest level since December
1969.” Story at...
https://www.cnbc.com/2022/06/03/jobs-report-may-2022-.html
ISM NON-MANUFACTURING (ISM via prnewswire)
"The May Manufacturing PMI® registered
56.1 percent, an increase of 0.7 percentage point from the reading of 55.4
percent in April. This figure indicates expansion in the overall economy for
the 24th month in a row after a contraction in April and May 2020. This is the second-lowest Manufacturing PMI® reading
since September 2020, when it registered 55.4
percent... "All of the six biggest manufacturing industries — Machinery;
Computer & Electronic Products; Food, Beverage & Tobacco Products;
Transportation Equipment; Petroleum & Coal Products; and Chemical Products
— registered moderate-to-strong growth in May.” Press release at...
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 1.6% to 4109.
-VIX rose about 0.3% to 24.79. (Not much for such a big drop in the S&P 500.)
-The yield on the 10-year Treasury rose to 2.940%.
PULLBACK DATA:
-Drop from Top: 14.3% as of today. 18.7% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 105-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 7.7% BELOW its 200-dMA & 3.3 %
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...and...we did call the market a trading “Buy” one day after the recent
trading-bottom on 12 May (a little early).
MY TRADING POSITIONS:
XLK*
UWM*
I’ll sell quickly if the rally appears to be failing.
XLE
DOW
TODAY’S COMMENT:
Oops...S&P 500 fell back to the upper trend line,
that’s a worry, but my Long-Term Indicator switched to BUY and...
I’ve seen enough bull-signs recently that I feel that the
rally will regain steam and may make it to the 200-dMA of the S&P 500. That
would be an 8% gain from today’s close. I could easily be wrong on this so my
trading positions will have tight stops. (I won’t let them fall far before I
sell.)
It feels awful to Buy when all we hear is Bear-Market
negativism – we’ll see.
I’ll review indicators below. Just a reminder though; indicators do not
give us a crystal ball to foretell the future. Most tell us what has been
happening in the past. They may suggest future trends especially when we can
identify divergences between indicators and price - reversals in indicators can
suggest reversals in price. The only indicator that may foretell the future is
my VIX indicator. That’s because VIX is
based on Options moves and the options players are betting on future prices.
That’s probably why VIX has always been one of my best indicators.
On Fridays, I summarize a number of indicators to get a
weekly feel for trend. Overall, the end-of-week summary remained on the Bull
side (8-bear and 14-bull). These indicators 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 10-dMA % of issues advancing on the NYSE
(Breadth) is above 50%.
-McClellan Oscillator is positive.
-There were back-to-back-to-back 80% up-volume days
Wednesday, Thursday and Friday of last week - VERY BULLISH.
-Short-term new-high/new-low data is sharply higher.
-Long-term new-high/new-low data is rising.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 24 May.
-MACD of S&P 500 price made a bullish crossover 23
May.
-My Money Trend indicator is moving higher.
-59% of the 15-ETFs that I track have been up over the
last 10-days.
-Non-crash Sentiment indicator is too Bearish and that’s
Bullish (as of Thursday’s close).
-The graph of the 100-day Count (the 100-day sum of up-days)
was 47, up from 46 two days ago, and the chart trend is up.
-The size of up-moves has been larger than the size of
down-moves over the last month.
-There was a Breadth Thrust Thursday. That’s a rare VERY bullish
sign.
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500, and the trend has turned up.
NEUTRAL
-The S&P 500 is 7.7% below its 200-dMA. (Bull
indicator is 12% below the 200-day.)
-The 52-week, New-high/new-low ratio improved by 3.5
standard deviations on 13 May. - Expired.
-Issues advancing on the NYSE (Breadth) compared to the
S&P 500 was neutral, but is very close to Bullish.
-The Fosback Hi-Low Logic Index – Neutral, but close to
Bullish.
-Friday a week ago was a Bullish Outside Reversal Day -
expired.
-Bollinger Bands.
-Buying Pressure minus Selling Pressure is flat.
-RSI.
-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 Calm-before-the-Storm/Panic Indicator.
-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
-VIX has slowed its rise.
-The 5-10-20 Timer System is HOLD; the 5-dEMA and 10-dEMA
are not both BELOW the 20-dEMA.
-There has been 1 Statistically-Significant day (big
moves in price-volume) in the last 15-days.
-Utilities (XLU) are outperforming the S&P 500, but divergence
between XLU and the S&P 500 is headed in a bullish direction – let’s call
it Neutral.
BEAR SIGNS
-There have been 6 Distribution Days since the last
Follow-Thru Day on 4 May.
-The 50-dMA percentage of issues advancing on the NYSE
(Breadth) is below 50%.
-The 100-dMA percentage of issues advancing on
the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE
(Breadth) has been below 50% for more than 100 consecutive days. (3 days in a
row is my “correction-now” signal)
-Overbought/Oversold Index (Advance/Decline Ratio).
-The smoothed advancing volume on the NYSE is falling.
-The Smart Money (late-day action) is falling.
-Slope of the 40-dMA of New-highs is falling. This is one
of my favorite trend indicators.
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 8 bear-signs and 14-Bull. Last week, there were 8 bear-signs and 13
bull-signs.
Today, the daily sum of 20 Indicators declined from +12
to +10 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from +93 to +101.
(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 Friday:
SENTIMENT, PRICE & VOLUME
are bullish; VIX is hold. In addition, there was an extremely bullish Breadth
Thrust signal, Thursday.
I am cautiously Bullish in the short-term and Bearish
longer-term.
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
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 roughly 45% 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.
