“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
“Bubbles tend to topple under their own weight. Everybody
is in. The last short has covered. The last buyer has bought (or bought massive
amounts of weekly calls). The decline starts and the psychology shifts from
greed to complacency to worry to panic. Our working hypothesis, which might be
disproven, is that September 2, 2020 was the top and the bubble has already
popped.” - David Einhorn, Greenlight hedge fund.
MARKIT FLASH US COMPOSITE PMI (IHS Markit)
“U.S. private sector business activity rose sharply in
November, as growth momentum picked up further. The overall expansion was the
fastest for over five and-a-half years, as both manufacturers and service
providers indicated a steeper upturn in output. The month also saw a survey
record rise in employment and an unprecedented increase in prices, the latter
in part linked to a record incidence of supply chain delays...“The November
PMI surveys provide the first postelection snapshot of the US economy, and
makes for very encouraging reading, though stronger economic growth is quite
literally coming at a price. “First the good news: business activity across
both manufacturing and services rose in November at the strongest rate since
March 2015. The upturn reflected a further strengthening of demand, which in
turn encouraged firms to take on staff at a rate not previously seen since the
survey began in 2009. “However, the surge in demand and hiring has pushed
prices and wages higher. Average selling prices for goods and services rose at
the fastest rate yet recorded by the survey, with shortages of supplies also
more widespread than at any time previously reported.” Press release at...
https://www.markiteconomics.com/Public/Home/PressRelease/8b22f8b636e442da8bf3bba1145bacd8
My cmt: Details on the Services and Manufacturing Flash
PMIs are also included in the above Press Release.
CHRISTIE (former NJ GOV) CALLS TRUMP TEAM NATIONAL
EMBARASSMENT (CNBC)
“Listen, I’ve been a supporter of the president, I voted
for him twice but elections have consequences and we cannot continue to act as
if something happened here that didn’t happen,” Christie explained...“They
allege fraud outside of the courtroom but when they go inside the courtroom
they don’t plead fraud and they don’t argue fraud,” Christie said, adding “you
have an obligation to present the evidence, the evidence has not been
presented.” Story at...
SOUTH DAKOTA NURSE – PATIENTS DENY COVID EXISTS – RIGHT
UP UNTIL DEATH (Washington Post)
“Their last dying words are, ‘This can’t be happening.
It’s not real,’” Doering said, adding that some patients prefer to believe that
they have pneumonia or other diseases rather than covid-19, despite seeing
their positive test results...“It is hard and sad because every hospital, every
nurse, every doctor in the state is seeing the same things,” Doering told CNN.
“These people are getting sick the same way, you treat them in the same way, they
die in the same way, and then you do it all over again.’” Story at...
https://www.washingtonpost.com/health/2020/11/16/south-dakota-nurse-coronavirus-deniers/
My cmt: These patients must be visiting some fake,
extremist web-sites. They certainly don’t have skills in critical thinking.
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website
at 6:30 pm Monday. 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. (I
averaged cases over the weekend.)
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose
about 0.6% to 3578.
-VIX dropped about 4% to 22.66.
-The yield on the 10-year
Treasury rose to 0.855%.
As is often the case, and as
we saw Friday, there are mixed signals today.
TOPPING INDICATORS:
-Breadth on the NYSE compared to the S&P 500 index is
still warning of a correction.
-The S&P 500 is 13.7% above its 200-dMA. (Sell point
is 12%.) When Sentiment is considered, the signal is also bearish.
-The Smart Money is
overbought.
Most of Friday’s bear signs
remain. (see Friday Blog), but now the MACD of S&P 500 price is close to a
bearish crossover.
On the Bullish side the 2 most
significant signs are: (1)The Fosback High-Low Logic Index is bullish (The
number of New-lows is very small); (2) The
slope of the 40-dMA of New-highs is rising. This suggests the trend is still up.
The daily sum of 20 Indicators
declined from +5 to Zero (a positive number is bullish; negatives are bearish).
The 10-day smoothed sum that smooths the daily fluctuations slipped from +110
to +96. (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 switched to HOLD, 23 Nov. Now, Price is bullish; Volume, Sentiment
& VIX indicators are neutral.
The extreme overbought market
pretty much guarantees that we’ll have a pullback of some kind. The other
possibility would be back and forth movement while the 200-dMA continues to
move up to resolve the overbought condition. That seems less likely.
I’ll continue to sit out.
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
MONDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained NEUTRAL.
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 current stock allocation is
about 30% invested in stocks. You may wish to have a higher or lower % invested
in stocks depending on your risk tolerance. 30% is a very conservative position
that I re-evaluate daily, but it is appropriate for the correction.
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 this correction is deep
enough, 80% would not be out of the question.
