“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
“After regulators shuttered Silicon Valley Bank and seized its deposits Friday, U.S. Treasury Secretary Janet Yellen said Sunday that she has been working ‘to address the situation in a timely way,’ but that a major government bailout is not on the table. ‘Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and the reforms that have been put in place means that we’re not going to do that again...’”
https://www.cnbc.com/2023/03/12/treasury-secretary-janet-yellen-says-us-government-wont-bail-out-silicon-valley-bank.html
My cmt: It seems possible that the FED could pause raising rates until markets are better prepared. That is not the consensus, however; a 25-basis point hike is expected at the next Fed meeting. The rate hikes have been the fastest in history. SVB failed because its treasury portfolio lost value due to rate hikes. This left them undercapitalized. When that became public knowledge, there was a 42 billion-dollar, bank-run and SVB failed.
“Stock futures jumped Sunday evening after regulators announced a plan to backstop all the depositors in failed Silicon Valley Bank and make additional funding available for other banks... Peter Boockvar, chief investment officer at Bleakley Financial Group, said Sunday during a CNBC special. “Now that we have that backstop, the markets are going to celebrate... “Going forward, I’m more worried about bank profitability than bank balance sheets...” Story at...
https://www.cnbc.com/2023/03/12/stock-market-futures-open-to-close-news.html
“This past week, the market took a double whammy from Jerome Powell’s testimony and concerns about a crack in the regional bank sector...The crack in regional banks is likely only starting as the Fed continues to hike interest rates, leading to more underperforming loans and reduced funding. Unlike the big banks, which have access to capital markets and trading revenues to offset traditional banking incomes, smaller banks have exposure to real estate, consumer, and small business loans that are more sensitive to increased borrowing costs... As noted last week, from a portfolio management perspective, we are caught between the improving bullish technicals and the bearish fundamentals. That obviously changed this past week, and longer-term, the fundamentals always win out... we suggest using any rallies to reduce equity risk, raise cash levels, and rebalance bond portfolios. The opportunity to increase equity risk will come, but such could be later this year.” Story at...
https://realinvestmentadvice.com/testimony-from-powell-kills-pivot-hopes/
I am not convinced yet, but I am on the edge of agreeing. It just depends on the indicators.
“After three years of around-the-clock tracking of COVID-19 data from around the world, Johns Hopkins has discontinued the Coronavirus Resource Center’s operations.” From the JHU website at... https://coronavirus.jhu.edu/map.html
Here’s my final chart on COVID thru 10 March, the last day Hopkins collected data. Good riddance!
-Monday the S&P 500 fell about 0.2% to 3856.
-VIX rose about 7% to 26.52.
-The yield on the 10-year Treasury dipped to 3.548%.
-Drop from Top: 19.6% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 298-days.
The S&P 500 is 2.1% BELOW its 200-dMA & 3.6% BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was in the 3600 area.
I am not trading as much as in the past. You may wish to use the momentum charts and/or the Monday 40-day gain charts for trading the Dow stocks and ETFs.
QLD – 2xNasdaq 100
SSO – 2x S&P 500
XLK – Technology ETF.
XLE – Energy Sector ETF. It hasn’t been doing much recently, but Russia is cutting production and that should help the sector. We have a good dividend in the meantime.
BA – (Boeing) I am late on this one, but we’ll see.
XLY - Consumer Discretionary ETF.
There was a Bottom Signal Friday suggesting a bounce higher soon. Today (Monday), the 7-day VIX Rate of Change (ROC) jumped to +35%. I don’t use this indicator in my system, but I do keep track of it. Tom McClellan writes that "...any reading above around +20% is a pretty good sign of an oversold bottom for stock prices, one that is worthy of a bounce.” That agrees with my Bottom Signal so I am waiting for more price confirmation before selling.
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.
*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
DOW 30 momentum ranking follows:
The top ranked Stock receives 100%. The rest are then ranked based on their momentum relative to the leading Stock.
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
My basket of Market Internals remained SELL. (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.)
