“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“The big money is not in the buying and selling. But in
the waiting.” - Charlie Munger, Vice Chairman, Berkshire Hathaway
“This country was founded by the bayonet;
it survives by the ballot. Those who
falsely disparage the honesty of our elections are striking a blow at the
foundations of our nation and should be charged with sedition.” – Meade Stith
PAYROLL REPORT / HOURLY EARNINGS (Yahoo Finance)
“The U.S. economy added back the most jobs in four months
in February, as easing COVID-19 case counts and a ramping vaccine rollout
allowed distancing restrictions to begin to moderate... "Today’s
employment report smashed expectations as 379K jobs returned to the economy
during the month of February..." Charlie Ripley, senior investment
strategist for Allianz Investment Management, said...” Story at...
Hourly earnings were up 2.3% as expected.
FACTORY ORDERS (FX Street)
“New orders for manufactured goods, Factory Orders, in
the US rose
by $5.2 billion, or 1.1%...” Story at...
https://www.fxstreet.com/news/us-factory-orders-rise-by-11-in-december-vs-07-expected-202102041505
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 8:00pm Friday. US total case numbers are on the left axis; daily numbers are
on the right side of the graph with the 10-dMA of daily numbers in Green.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 jumped
about 2% to 3842.
-VIX fell about 14% to 24.66.
-The yield on the 10-year
Treasury rose to 1.568%.
Correction Data:
-Friday was Day-14 of the
correction. (From top to bottom the average small correction {<10%} over the
last 10-years has lasted about 33 days.)
-The S&P 500 is down 2.4%
from its all-time high. The average drop from the top for a small correction is
about 8%.
-The Index is 10.7% above its
200-dMA
-The Index is 0.5% above its
50-dMA
I took a large short-position 4 March using SDS. This effectively
reduced my % of stocks invested from 60% to a more conservative 50%. I still
have that in place.
Here's Friday's run-down of some important
indicators. These tend to be both long-term and short-term, so they are
somewhat different than the 20 that I report on daily.
BULL SIGNS
-The smoothed advancing volume on the NYSE is rising.
-The 50-dMA % of stocks advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA of the % of stocks advancing on the
NYSE (Breadth) is above 50%.
-Cyclical Industrials (XLI-ETF) are outperforming the
S&P 500.
-The size of up-moves has been larger than the size of
down-moves over the last month.
-The S&P 500 is outperforming Utilities ETF (XLU).
NEUTRAL
-Bollinger Bands were oversold 3/4/2021, but are neutral
again.
-Breadth on the NYSE compared to the S&P 500 index is
neutral.
-Overbought/Oversold Index (Advance/Decline Ratio).
-My Money Trend indicator is bullish.
-VIX is neutral.
-The Fosback High-Low Logic Index is neutral.
-RSI.
-Non-crash Sentiment indicator remains neutral, but it is
too bullish and that means it is leaning bearish.
-The Smart Money (late-day action) is mixed. This indicator
is based on the Smart Money Indicator (a variant of the indicator developed by
Don Hayes).
-We’ve seen 4 up-days over the last 10-days. Neutral.
-There have been 8 up-days over the last 20 days. Neutral
-Statistically, the S&P 500 gave a panic-signal, 27
January. This usually means more downside to come, but the signal has expired.
-The market has broadened out; 7.6% of all issues traded
on the NYSE made new, 52-week highs when the S&P 500 made a new
all-time-high on 12 Feb. (there is no bullish signal for this indicator.)
-6 Jan, the 52-week, New-high/new-low ratio improved by 4.3
standard deviations – very bullish and also rare. Signal has expired.
-45% of the 15-ETFs that I track have been up over the
last 10-days – neutral.
BEAR SIGNS
-Distribution warnings. There have been 7 Distribution
days in the last 25-trading days.
-The 10-dMA of stocks advancing on the NYSE
(Breadth) is below 50%
-MACD of the percentage of stocks advancing on the NYSE (breadth)
made a bearish crossover 21 Jan.
-There have been 7 Statistically Significant days in the
last 15-days. This signal can be Bearish or Bullish. This time the Index is
close to a top, so its bearish.
-MACD of S&P 500 price made a bearish crossover 22
February.
-McClellan Oscillator is negative.
-Long-term new-high/new-low data is falling.
-Short-term new-high/new-low data is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA
are both below the 20-dEMA.
-The S&P 500 is 10.7% above its 200-dMA (Sell point
is 12%.); but when Sentiment is considered, the signal is bearish.
-Slope of the 40-dMA of New-highs is falling.
On Friday, 21 February, 2 days after the top of the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 11
bear-signs and 6 bull-signs. Last week, there were 11 bear-signs and 5 bull-signs.
The daily sum of 20 Indicators
improved from -2 to -1 (a positive number is bullish; negatives are bearish);
the 10-day smoothed sum that smooths the daily fluctuations improved from -45
to -39 (These numbers sometimes change after I post the blog based on data that
comes in late.) Most of these indicators are short-term and many are trend
following.
The Long Term NTSM indicator
ensemble remained HOLD. Sentiment & VIX are neutral; Volume is
bearish; Price is bullish.
Today, was a statistically-significant,
up-day. That just means that the price-volume move exceeded my statistical
parameters. Data shows that a statistically-significant, up-day is followed by
a down-day about 60% of the time. As noted above, this is a bearish sign. These back-and-forth, big-moves tend to happen
at tops.
I haven’t seen a good sign to indicate that this pullback
is over. Yesterday’s high-volume was a possible bottom, but I would have
preferred a down-day today with lower volume to give us a chance at a more
reliable buy-signal. The signals were a
lot more bullish last Friday which suggests that the pullback may be shorter
than the average correction. We’ll see. The Index hasn’t tested its recent low
of 3714. If that were to fail, 3669, a
prior low, or even the 200-dMA of 3472 are possible targets for a more extended
correction.
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.
*For additional background on
the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
TODAY’S 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.
For more details, see NTSM
Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
FRIDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained NEUTRAL on the market. 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.
Using the Short-term indicator
in 2018 in SPY would have made a 5% gain instead of a 6% loss for buy-and-hold.
The methodology was Buy on a POSITIVE indication and Sell on a NEGATIVE
indication and stay out until the next POSITIVE indication. The back-test
included 13-buys and 13-sells, or a trade every 2-weeks on average.
As of 4 March, my stock-allocation
is about 50% invested in stocks. 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 a retiree.
The markets have not
retested the lows on recent corrections and that has left me under-invested on
the bounces. I will need to put less reliance on retests in the future.
As a retiree, 50% in the stock
market is about fully invested for me – it is a cautious and conservative
number. If I feel very confident, I might go to 60%; if a correction is deep
enough, 80% would not be out of the question.
