“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“You're thinking of this place all wrong. As if I had the
money back in a safe. The money's not here. Your money's in Joe's house...right
next to yours. And in the Kennedy house, and Mrs. Macklin's house, and a hundred
others. Why, you're lending them the money to build, and then, they're going to
pay it back to you as best they can...Now, we can get through this thing all
right. We've got to stick together, though. We've got to have faith in each
other.” – George Bailey (Jimmy Stewart) explains the Savings and Loan business
to his customers in “It’s a Wonderful Life.”
My cmt: There’s not a bank in the country that could pay out 100% of account holders in a bank-run panic.
BULLS MAINTAIN CONTROL (RIA)
“As I noted several times over the last few days, the broken support of the 200-DMA was important. However, a break of support needs to confirm itself by staying below that support for a trading week. Yesterday [Thursday], the market rallied on news of more bank bailouts that pushed the money back into the market. The rally, led by Technology stocks, cleared the 200-DMA putting the bulls back in control of the market narrative...If the market clears 4000, you can increase equity allocations accordingly. If not, we may be looking at another leg lower short term. Remain cautious for now and pick your spots to increase risk cautiously.” Commentary at...
https://realinvestmentadvice.com/fed-mandates-or-financial-stability/
My cmt: Interesting. I’ve not seen this definition of a weekly confirmation of a trend break before. I have seen “consecutive closes below trend” or even a “close >3% below the 200-day” as trend break. I like this one – it’s more bullish. It also helps prevent whipsaw trading moves.
VIX INDEX ABOVE ITS FUTURES – SUGGESTS BOTTOM (McClellan
Publications)
“...the VIX Index is above all of its futures contracts. That produces a negative reading on this chart. Such readings do not come along very often, and they are pretty good indications of a bottoming condition for stock prices. The direct message is that the SP500 options traders who drive the VIX Index are feeling more fearful than the VIX futures traders believe is merited. With any overbought or oversold reading on any indicator, it is important to realize that it represents a “condition”, and is not a “signal”. The market has no requirement to respond in the way that we think it should...” Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/vix_index_above_all_of_its_futures/
PROTESTORS STOP JUDGE’S PRESENTATION (WSJ)
My Struggle Session at Stanford Law School.
“...The most disturbing aspect of this shameful debacle is what it says about the state of legal education. Stanford is an elite law school. The protesters showed not the foggiest grasp of the basic concepts of legal discourse: That one must meet reason with reason, not power. That jeering contempt is the opposite of persuasion. That the law protects the speaker from the mob, not the mob from the speaker. Worst of all, Ms. Steinbach’s [Tirien Steinbach, associate dean for diversity, equity and inclusion] remarks made clear she is proud that Stanford students are being taught this is the way law should be.
I have been criticized in the media for getting angry at the protesters. It’s true I called them “appalling idiots,” “bullies” and “hypocrites.” They are, and I won’t apologize for saying so. Sometimes anger is the proper response to vicious behavior.” - Judge Stuart K. Duncan, U.S. Court of Appeals for the Fifth Circuit. Commentary at...
https://www.wsj.com/articles/struggle-session-at-stanford-law-school-federalist-society-kyle-duncan-circuit-court-judge-steinbach-4f8da19e
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.9% to 3952.
-VIX fell about 5% to 24.15.
-The yield on the 10-year Treasury rose to 3.486%.
PULLBACK DATA:
-Drop from Top: 17.6% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 303-days.
The S&P 500 is 0.4% ABOVE its 200-dMA & 1.5% 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.
MY TRADING POSITIONS:
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. They have more work than they can handle and are hiring. They should do well going forward.
XLY - Consumer Discretionary ETF.
*KRE – Regional Banking. Added today. This is a small position for me. I have no cash left.
SHY – Short term bonds. 30-day yield is 4.6%. (Trailing
1-year yield is 1.3%.) I’ll hold this, but if the market retests the lows, I’ll
sell it and buy stocks.)
If it’s not tech, it’s probably not working.
TODAY’S COMMENT:
Markets closed near their highs today and the Russell 2000 did well. Those are bullish signs. The Russell has been an underperformer for a while. In addition, the S&P 500 closed above its 200-dMA and that is a critical level. I was ready to sell this market if the S&P 500 wasn’t able to close above its 200-day in the next couple of days. The bear indicators led 2 to 1 Friday, but today, price isn’t confirming the bear-signal, so we’ll keep watching price action. Today, it was good.
I added a small position in the KRE-ETF (Regional Banks)
today. I think the selling in small banks is overdone.
Today, the daily spread of 20 Indicators (Bulls minus
Bears) improved from -8 to -5 (a positive number is bullish; negatives are
bearish); the 10-day smoothed sum that smooths the daily fluctuations declined
from -31 to -41. (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 was SELL:
VIX & VOLUME are negative; PRICE & SENTIMENT are neutral. Sentiment flipped
to Neutral so the overall indicator is now Sell. Like the Friday rundown signal, the key now
is to watch price action and see if there is confirmation of the sell signal. There are now enough good Buy-signals (including
a strong buy on 10 March) I am reluctant to sell now, so I am holding.
(The important BUY in this indicator was on 21 October,
7-days after the bottom. For my NTSM overall signal, I suggested that a
short-term buying opportunity occurred on 27 September (based on improved
market internals on the retest), although without market follow-thru, I was
unwilling to call a buy; however, I did close shorts and increased stock
holdings. I issued a Buy-Signal on 4 October, 6-days before the final bottom,
based on stronger market action that confirmed the market internals signal. The
NTSM sell-signal was issued 20 December, 8 sessions before the high of this
recent bear market, based on the bearish Friday rundown of indicators.)
Bottom line: I am a nervous bull, but we saw good price-action
today. The S&P 500 moved above its 200-dMA; let’s see if it can break above
the 50-dMA and remain there.
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
MONDAY MARKET INTERNALS (NYSE DATA)
My basket of Market Internals improved to HOLD. (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 current invested
position is about 75% stocks, including stock mutual funds and ETFs. I’m
usually about 50% 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.
My cmt: There’s not a bank in the country that could pay out 100% of account holders in a bank-run panic.
“As I noted several times over the last few days, the broken support of the 200-DMA was important. However, a break of support needs to confirm itself by staying below that support for a trading week. Yesterday [Thursday], the market rallied on news of more bank bailouts that pushed the money back into the market. The rally, led by Technology stocks, cleared the 200-DMA putting the bulls back in control of the market narrative...If the market clears 4000, you can increase equity allocations accordingly. If not, we may be looking at another leg lower short term. Remain cautious for now and pick your spots to increase risk cautiously.” Commentary at...
https://realinvestmentadvice.com/fed-mandates-or-financial-stability/
My cmt: Interesting. I’ve not seen this definition of a weekly confirmation of a trend break before. I have seen “consecutive closes below trend” or even a “close >3% below the 200-day” as trend break. I like this one – it’s more bullish. It also helps prevent whipsaw trading moves.
“...the VIX Index is above all of its futures contracts. That produces a negative reading on this chart. Such readings do not come along very often, and they are pretty good indications of a bottoming condition for stock prices. The direct message is that the SP500 options traders who drive the VIX Index are feeling more fearful than the VIX futures traders believe is merited. With any overbought or oversold reading on any indicator, it is important to realize that it represents a “condition”, and is not a “signal”. The market has no requirement to respond in the way that we think it should...” Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/vix_index_above_all_of_its_futures/
My Struggle Session at Stanford Law School.
“...The most disturbing aspect of this shameful debacle is what it says about the state of legal education. Stanford is an elite law school. The protesters showed not the foggiest grasp of the basic concepts of legal discourse: That one must meet reason with reason, not power. That jeering contempt is the opposite of persuasion. That the law protects the speaker from the mob, not the mob from the speaker. Worst of all, Ms. Steinbach’s [Tirien Steinbach, associate dean for diversity, equity and inclusion] remarks made clear she is proud that Stanford students are being taught this is the way law should be.
I have been criticized in the media for getting angry at the protesters. It’s true I called them “appalling idiots,” “bullies” and “hypocrites.” They are, and I won’t apologize for saying so. Sometimes anger is the proper response to vicious behavior.” - Judge Stuart K. Duncan, U.S. Court of Appeals for the Fifth Circuit. Commentary at...
https://www.wsj.com/articles/struggle-session-at-stanford-law-school-federalist-society-kyle-duncan-circuit-court-judge-steinbach-4f8da19e
-Monday the S&P 500 rose about 0.9% to 3952.
-VIX fell about 5% to 24.15.
-The yield on the 10-year Treasury rose to 3.486%.
-Drop from Top: 17.6% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 303-days.
The S&P 500 is 0.4% ABOVE its 200-dMA & 1.5% 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. They have more work than they can handle and are hiring. They should do well going forward.
XLY - Consumer Discretionary ETF.
*KRE – Regional Banking. Added today. This is a small position for me. I have no cash left.
Markets closed near their highs today and the Russell 2000 did well. Those are bullish signs. The Russell has been an underperformer for a while. In addition, the S&P 500 closed above its 200-dMA and that is a critical level. I was ready to sell this market if the S&P 500 wasn’t able to close above its 200-day in the next couple of days. The bear indicators led 2 to 1 Friday, but today, price isn’t confirming the bear-signal, so we’ll keep watching price action. Today, it was good.
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:
*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
MONDAY MARKET INTERNALS (NYSE DATA)
