“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
Political commentary at...
https://michaelpramirez.com/index.html
I am traveling today so this will be a shortened post. I am reminded why one shouldn’t fly late in the day.
Delays...delays...delays...thunderstorms in Charlotte and Norfolk.
CPI (CNBC)
“The headline consumer price index for July rose 8.5% year over year, and was flat compared to June. Economists surveyed by Dow Jones were expecting increases of 8.7% and 0.2%, respectively.”
https://www.cnbc.com/2022/08/09/stock-futures-tick-up-as-investors-brace-for-july-inflation-report-.html
Futures Markets jumped up after the report. I don’t really get it; Is there much difference between 8.5% actuala vs. 8.7% expected?
NAVIGATING RISK AND REWARD (Northman trader)
“...on the psychology front: A classic big bear market rally emerges not only from deeply oversold levels, but also from extremely negative sentiment and positioning. That’s when the market voices keep screaming for more new lows at the lows and then they get their face ripped off as technicals demand their reconnects and shorts are relentlessly forced to cover. In process pessimism leads to optimism and people tend to chase higher prices at the wrong moment when the risk/reward is shifting again as now the voices scream bottom and are calling for new highs to come. I submit this is the process we’ve been witnessing since the June lows... the US Fed keeps insisting on denying a coming recession led by Bullard who literally insists on claiming there won’t be a recession coming while calling for a 3.5%-4% fed funds rate for the end of this year at the same time. Sorry folks, but that’s just either dishonest or intellectually bankrupt drivel...” – Sven Henrich. Commentary at...
https://northmantrader.com/2022/08/04/navigating-risk-reward/
PUNDITS WRONGLY CLAIM MAR-A-LAGO RAID COULD DISQUALIFY TRUMP FROM OFFICE (Jonathan Turley Blog)
“The FBI raid on Mar-a-Lago has unleashed a familiar euphoria among critics...One MSNBC pundit declared that day of the “orange jumpsuit” may finally be at hand while another simply exclaimed “hallelujah.” It was a tad premature since we do not even know if classified material was found and, if so, whether there is a criminal case to be made from such a discovery...
...even the most serious cases of mishandling classified records have not resulted in major charges. One example is that of former Clinton National Security Adviser Sandy Berger who was found to have secretly stuffed classified material into his pants and socks to remove them from a secure facility. He then hid them in a spot to be retrieved later. It was a flagrant and premeditated violation of federal law and put national security secrets at risk. Yet, Berger was allowed to plead guilty to a misdemeanor and did not have to serve any jail time. Indeed, his security clearance was suspended for only three years.” Commentary at...
https://jonathanturley.org/2022/08/09/the-whole-enchilada-liberal-figures-wrongly-claim-the-mar-a-lago-raid-could-disqualify-trump-from-future-office/#more-192350
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 jumped up about 2.1% to 4210, close to a 50% retracement from the bottom to top.
-VIX fell about 9% to 19.74.
-The yield on the 10-year Treasury was basically unchanged at 2.788%.
PULLBACK DATA:
-Drop from Top: 12.2% as of today. 23.6% max.
-Trading Days since Top: 151-days.
-The S&P 500 is 2.8% Below its 200-dMA & closed 6.7% Above its 50-dMA.
-Resistance points for the rally, are: (1) 4240, the 50% retracement point (top to bottom); (2) 4342 & 4350, the 200-dMA & upper longer-term trend line, respectively; (3) or 4370, the 62% Fibonacci retracement point for those who believe in that sort of thing.
*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, short the S&P 500 ETF.
TODAY’S COMMENT:
The S&P 500 broke above its June high levels at 4175. I’ll consider closing my short position and adding to the stock side of the portfolio for a trade. I’ll look at Boeing and maybe the XLE. May as well join the FOMO crowd at least a little. As we predicted some time back, the 200-dMA seemed like a possible target for the rally. Now, the Index is very close to that level.
There were lots of bull signs today.
Today, the daily sum of 20 Indicators improved from +14 to
+16 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from +95 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. With a more bullish 10-dMA, the call is muddied regarding whether the
Index made a top on 9 August.
Today was a 90% up-volume day and that’s a bull signal.
Usually, these monster up-volume days happen within 5-days of a bottom; if that
had happened, I’d be taking a much more bullish stand. As it is, it confirms
the current bullish-trend, although that hardly seems necessary.
LONG-TERM INDICATOR: The Long Term NTSM indicator
remained BUY: VIX, PRICE & VOLUME are bullish; SENTIMENT is neutral. I
still expect the S&P 500 to test its prior low of 3667. Remember for the
longer-term, one indicator trumps them all – “Don’t fight the FED.”
I’m a Bear longer-term; short-term, the bulls are back
control of the markets.
The markets may be one piece of bad news from a market rout. I don’t know what that news may be, but it wouldn’t take much to kill the rally. CPI is out tomorrow.
Unchanged-volume was surprisingly high today. Were the
Pros unloading stocks to us sheep? That was one of the few concerning signs I
saw today.
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
My basket of Market Internals remained BUY.
(Market Internals are a decent trend-following
analysis of current market action, but should not be used alone for short term
trading. 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.
Political commentary at...
https://michaelpramirez.com/index.html
“The headline consumer price index for July rose 8.5% year over year, and was flat compared to June. Economists surveyed by Dow Jones were expecting increases of 8.7% and 0.2%, respectively.”
https://www.cnbc.com/2022/08/09/stock-futures-tick-up-as-investors-brace-for-july-inflation-report-.html
Futures Markets jumped up after the report. I don’t really get it; Is there much difference between 8.5% actuala vs. 8.7% expected?
NAVIGATING RISK AND REWARD (Northman trader)
“...on the psychology front: A classic big bear market rally emerges not only from deeply oversold levels, but also from extremely negative sentiment and positioning. That’s when the market voices keep screaming for more new lows at the lows and then they get their face ripped off as technicals demand their reconnects and shorts are relentlessly forced to cover. In process pessimism leads to optimism and people tend to chase higher prices at the wrong moment when the risk/reward is shifting again as now the voices scream bottom and are calling for new highs to come. I submit this is the process we’ve been witnessing since the June lows... the US Fed keeps insisting on denying a coming recession led by Bullard who literally insists on claiming there won’t be a recession coming while calling for a 3.5%-4% fed funds rate for the end of this year at the same time. Sorry folks, but that’s just either dishonest or intellectually bankrupt drivel...” – Sven Henrich. Commentary at...
https://northmantrader.com/2022/08/04/navigating-risk-reward/
PUNDITS WRONGLY CLAIM MAR-A-LAGO RAID COULD DISQUALIFY TRUMP FROM OFFICE (Jonathan Turley Blog)
“The FBI raid on Mar-a-Lago has unleashed a familiar euphoria among critics...One MSNBC pundit declared that day of the “orange jumpsuit” may finally be at hand while another simply exclaimed “hallelujah.” It was a tad premature since we do not even know if classified material was found and, if so, whether there is a criminal case to be made from such a discovery...
...even the most serious cases of mishandling classified records have not resulted in major charges. One example is that of former Clinton National Security Adviser Sandy Berger who was found to have secretly stuffed classified material into his pants and socks to remove them from a secure facility. He then hid them in a spot to be retrieved later. It was a flagrant and premeditated violation of federal law and put national security secrets at risk. Yet, Berger was allowed to plead guilty to a misdemeanor and did not have to serve any jail time. Indeed, his security clearance was suspended for only three years.” Commentary at...
https://jonathanturley.org/2022/08/09/the-whole-enchilada-liberal-figures-wrongly-claim-the-mar-a-lago-raid-could-disqualify-trump-from-future-office/#more-192350
-Wednesday the S&P 500 jumped up about 2.1% to 4210, close to a 50% retracement from the bottom to top.
-VIX fell about 9% to 19.74.
-The yield on the 10-year Treasury was basically unchanged at 2.788%.
-Drop from Top: 12.2% as of today. 23.6% max.
-Trading Days since Top: 151-days.
-The S&P 500 is 2.8% Below its 200-dMA & closed 6.7% Above its 50-dMA.
-Resistance points for the rally, are: (1) 4240, the 50% retracement point (top to bottom); (2) 4342 & 4350, the 200-dMA & upper longer-term trend line, respectively; (3) or 4370, the 62% Fibonacci retracement point for those who believe in that sort of thing.
SH, short the S&P 500 ETF.
The S&P 500 broke above its June high levels at 4175. I’ll consider closing my short position and adding to the stock side of the portfolio for a trade. I’ll look at Boeing and maybe the XLE. May as well join the FOMO crowd at least a little. As we predicted some time back, the 200-dMA seemed like a possible target for the rally. Now, the Index is very close to that level.
The markets may be one piece of bad news from a market rout. I don’t know what that news may be, but it wouldn’t take much to kill the rally. CPI is out tomorrow.
