“Don't allow political parties to use whatever grievances
that have been historically against you to force you to look at them as the
savior so that they can swoop in and think they are saving you when all they
are doing is pitting one race against the other...” - Winsome Sears, Virginia Lieutenant Governor, elect.
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Markets are positioned to rally into year end” – Tom Lee,
Fundstrat Managing Partner.
PAYROLL REPORT / UNEMPLOYMENT RATE (Reuters)
“U.S. employment increased more than expected in October
as the headwind from the surge in COVID-19 infections over the summer subsided,
offering more evidence that economic activity was regaining momentum early in
the fourth quarter. Nonfarm payrolls increased by 531,000 jobs last month...”
Story at...
https://www.reuters.com/business/us-october-payrolls-surge-back-virus-impact-fades-2021-11-05/
The unemployment rate declined to 4.6%.
AVG HOURLY EARNINGS
“...the average hourly earnings for all employees last
month increased by 11 cents to $30.96. A shortage of workers accepting low-wage
jobs in the wake of the pandemic shock has been linked to the rising wages seen
in recent months, as many major companies struggled to hire back staff let go
in the early days of the pandemic.” Story at...
JAYAPAL SINKS PELOSI PLAN (msn.com)
“The head of the Congressional Progressive Caucus quickly
shut down Speaker Nancy Pelosi's (D-Calif.) plan to vote Friday on an
infrastructure bill without also passing the larger social benefits package
that President Biden has sought for months. Rep. Pramila Jayapal (D-Wash.) said
liberals are holding firm to their insistence that both bills move together - a
strategy they believe gives them the greatest leverage in negotiations with
centrist Democrats in the Senate.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 6:30 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. I added the smoothed 10-dMA of new cases (in purple) to the chart.
Numbers have flattened and are slowly starting to rise.
Let’s hope that trend doesn’t continue.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.4% to 4698.
-VIX rose about 7% to 16.48. Options players suspect the
markets are headed for a down-day. It won’t go up forever.
-The yield on the 10-year Treasury fell to 1.453%. (Bond
rates falling suggests inflation fears are falling too.)
The Friday run-down of some important indicators remains
on the bull side (3-bear and 17-bull) much stronger than last week. These
indicators tend to be both long-term and short-term, so they are different than
the 20 that I report on daily. Details follow:
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 issues advancing on the NYSE
(Breadth) is above 50%.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bullish crossover 23 September.
-MACD of S&P 500 price made a bullish crossover, 13
October.
-McClellan Oscillator.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA
are both above the 20-dEMA.
-The size of up-moves has been larger than the size of
down-moves over the last month.
-The Smart Money (late-day action) indicates the Pros are
leaning bullish. (This indicator is based on the Smart Money Indicator
developed by Don Hayes).
-Cyclical Industrials (XLI-ETF) are under-performing the
S&P 500, but the curve is sharply rising so this goes in the bull category.
-Slope of the 40-dMA of New-highs is up. This is one of
my favorite trend indicators.
-Long-term new-high/new-lows are rising.
-My Money Trend indicator is rising.
-The smoothed advancing volume on the NYSE is rising.
-Distribution Days were canceled by a Follow-Thru day on
3 November. – Bullish.
-The S&P 500 is out-performing the Utilities ETF
(XLU).
-60% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-Non-crash Sentiment indicator is leaning bearish, but
not enough to send a bullish signal.
-There was a Hindenburg Omen signal 28 September. The McClellan Oscillator turned positive
afterward, so the Omen has been cancelled.
-There have been 3 Statistically-Significant days in the
last 15-days – too low to send a signal. This can be a bull or bear.
-Bollinger Bands
-Breadth on the NYSE compared to the S&P 500 index is
neutral.
-Calm-before-the-Storm Indicator – expired.
-The S&P 500 is 11.0% 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.
-The Fosback High-Low Logic Index is neutral.
-Statistically, the S&P 500 gave a panic-signal 17
Sept. Signal has expired.
-8.6% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high today, 5 November. (There
is no bullish signal for this indicator.) This is a the above average for
all-time highs and it suggests that if we do have a pullback, it is likely to
be less than 10%.
-3 November, the 52-week, New-high/new-low ratio improved
by 0.91 standard deviations, somewhat bullish, but Neutral.
-VIX is falling, but not enough to send a signal.
-Overbought/Oversold Index (Advance/Decline Ratio) is Neutral.
-Short-term new-high/new-low data is trending flat.
BEAR SIGNS
-There have been 16 up-days over the last 20 sessions - Bearish
-There have been 9 up-days over the last 10-sessions – Bearish.
-RSI’s value of 91 has been overbought 10 out of the last
11 sessions.
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 3 bear-signs and 17 bull-signs. Last week, there were 6 bear-signs and 12
bull-signs.
There is only 1 topping warning now in effect: RSI
remains overbought.
The daily sum of 20 Indicators improved from +2 to +7 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -1 to +5. (These numbers
sometimes change after I post the blog based on data that comes in late.) Most
of these indicators are short-term so they tend to bounce around a lot.
The Long Term NTSM indicator
ensemble slipped to HOLD based on the bearish number of up-days over a 10 and
20-day time frame. Price and Volume are bullish; Sentiment and VIX indicators
are neutral.
I remain bullish, but the markets may be getting too
bullish. Bollinger Bands and other topping indicators are close to issuing a top
warning.
I will be cutting back to my normal fully invested
position (50% in stocks) from my current position of 65% in stocks if topping indicators
or other important indicators warn.
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
** XLE has outgained XLY over the
last 2 months so I will continue to hold XLE rather than switching to XLY.
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 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 usually right, but they are often late. They are most useful when they diverge from
the Index.
My stock-allocation in the
portfolio is now about 65% invested in stocks; this is above my “normal” fully
invested stock-allocation of 50% stocks. Indicators are very bullish, so I am
holding a short-term position in additional Index Funds to boost returns.
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 general rule, some
suggest that the % of portfolio invested in the stock market should be one’s
age subtracted from 100. So, a
30-year-old person would have 70% of the portfolio in stocks, stock mutual
funds and/or stock ETFs. That’s ok, but
for older investors, I usually don’t recommend keeping less than 50% invested
in stocks (as a fully invested position) since most people need some growth in
the portfolio to keep up with inflation.
