“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“People always ask me what is going on in the markets. It
is simple. Greatest Speculative Bubble of All Time in All Things. By two orders
of magnitude.” – Michael “Big Short” Burry.
"If I was Darth Vader and I wanted to destroy the US
economy, I would do aggressive spending in the middle of an already hot economy...This
is the biggest bubble I've seen in my career." - Stanley Druckenmiller,
billionaire investor.
“Inflation is not going to be transitory; I’ve been
pretty certain in my mind about three prior calls. This is the fourth one.” -
Mohamed El-Erian, Chief economic adviser at Allianz SE
PAYROLL REPORT / UNEMPLOYMENT RATE / AVG HOURLY EARNINGS
(CNBC)
“Hiring rose in July at its fastest pace in nearly a year
despite fears over Covid-19′s delta variant and as companies struggled with a
tight labor supply, the Labor Department reported Friday. Nonfarm payrolls
increased by 943,000 for the month while the unemployment rate dropped to
5.4%...
...Average hourly earnings also increased more than
expected, rising 0.4% for the month and are up 4% from the same period a year
ago...” Story at...
https://www.cnbc.com/2021/08/06/jobs-report-july-.html
WE ARE FAILING AT COVID AT EXACTLY THE WRONG TIME (USA
Today)
“Dr. Scott Gottlieb, former chief of the Food and Drug
Administration, says it's possible that data only captures a fraction of people
who have the virus. ‘I wouldn't be surprised if, on the whole, we're
infecting up to a million people a day right now, and we're just picking up
maybe a 10th of that,’ he told CNBC...
...Delta is substantially more contagious than
previous variants...
...Even in the case of an outbreak like the one in Massachusetts, vaccinations prevented
hospitalizations. About three-fourths of people infected in the outbreak
were fully vaccinated against the coronavirus, none of whom died, and only a
few were hospitalized.” Story at...
TEXAS REPUBLICAN LEADER DIES OF COVID19 FIVE-DAYS AFTER
ANTI VAX POST (msn.news)
“A Texas Republican leader who was hospitalized with
COVID-19 died Wednesday, just days after he shared a post on social media
questioning the effectiveness of the coronavirus vaccine...Apley had also
previously vocalized his opposition to vaccinations and mask mandates, and in
May shared a flyer for a mask burning event.” Story at...
Texas
Republican leader dies of COVID-19 five days after anti-vaccination post
(msn.com)
My cmt: He was 45 years old. I feel bad for his family, but this is just
another example of Darwinism at work – the herd is being culled of idiots.
CORONAVIRUS (NTSM)
My daughter is an ER nurse in Richmond, Virginia. She
says Covid numbers are thru the roof.
The ICU is full and she has ICU patients in the ER waiting for a
bed. The ER is full, too. Patients are
unvaccinated or immune-compromised. They’re also younger.
She admitted a baby to the Hospital recently. The older brother brought the virus home from
summer school and infected the entire family. Anti-maskers are missing the fact
that Delta Covid is a LOT more contagious. That is causing problems in states
that did well before.
For example, Florida did well in the first Covid wave
because the virus impacted older people more.
The old took it seriously. They quarantined; wore masks; and followed
CDC guidance. Younger people can’t
quarantine as easily, since they must work, but they also aren’t as compliant
with CDC guidance and are less likely to get vaccinated. In addition, they have
dropped their guard under the assumption that Covid was gone. The Delta variant has proved them wrong. A
younger cohort is now arriving at the hospital. Along with the rest of the
nation, Florida numbers are very high.
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:00 PM Friday. U.S. total case numbers are on the left axis; daily numbers
are on the right side of the graph in Red with the 10-dMA of daily numbers in
Green.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.2% to 4437.
-VIX dipped about 7% to 16.15.
-The yield on the 10-year Treasury rose to 1.303%.
The markets still look bullish.
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 10-dMA of issues advancing on the NYSE
(Breadth) is above 50%.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is above 50%.
-The 100-dMA of the % of issues advancing on the
NYSE (Breadth) is above 50%.
-The smoothed advancing volume on the NYSE is rising.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are
both above the 20-dEMA.
-MACD of S&P 500 price made a bullish crossover, 6
August.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 26 July.
-Short-term new-high/new-low data is rising.
-McClellan Oscillator.
-The S&P 500 is out-performing the Utilities ETF
(XLU), not as much as I’d like, but I’ll leave it in the bull category for now.
NEUTRAL
-Distribution Days.
-Bollinger Bands
-RSI.
-Statistically, the S&P 500 gave a panic-signal, 18
June, but the signal has expired.
-Non-crash Sentiment indicator remains neutral, but it is
very bullish and that means the signal is leaning bearish.
-5.2% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high today, 6 August. (There is
no bullish signal for this indicator.) This is below average, but not low
enough to send a bear signal – something to watch.
-The Fosback High-Low Logic Index is neutral.
-There have been 12 up-days over the last 20 days.
Neutral
-There have been 6 up-days over the last 10-days.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to give a signal. This indicator
is improving.
-VIX.
-Overbought/Oversold Index (Advance/Decline Ratio).
-29 July, the 52-week, New-high/new-low ratio improved by
0.4 standard deviations, somewhat bullish, but neutral.
-The S&P 500 is 11.9% above its 200-dMA (Bear
indicator is 12%.). This value was 15.9% above the 200-dMA when the 10%
correction occurred in Sep 2020.
-There have been 3 Statistically-Significant days in the
last 15-days. This can be a bull or bear signal. 3 is neutral.
-The Smart Money (late-day action). (This indicator is
based on the Smart Money Indicator developed by Don Hayes).
-56% of the 15-ETFs that I track have been up over the
last 10-days, but this stat has been trending lower so I’ll call it neutral.
BEAR SIGNS
-My Money Trend indicator.
-Long-term new-high/new-low data is falling.
-Breadth on the NYSE compared to the S&P 500 index is
bearish.
-Slope of the 40-dMA of New-highs is falling. This is one
of my favorite trend indicators.
-Cyclical Industrials (XLI-ETF) are under-performing the
S&P 500 - bearish. This one looks like it is turning around, but I’ll leave
it bearish for now.
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 5
bear-signs and 10 bull-signs. Last week, there were 5 bear-signs and 11
bull-signs.
Today’s Friday count is about the same as last Friday,
but it is a significant improvement compared to 2 weeks ago. This is a bullish
indication overall.
The daily sum of 20 Indicators improved from -4 to -1 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -38 to -34. (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 remained
HOLD. Volume, VIX, Price & Sentiment are neutral.
I remain cautiously bullish.
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 improved to BULLISH 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.
My stock-allocation is about 50%
invested in stocks. I am not super bullish (or bearish) and I am watching the
markets closely.
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
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, and I can call a bottom, 80% would not be out
of the question.
