“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
IHS MARKIT COMPOSITE
PMI (Markit Economics)
“Adjusted for seasonal factors, the IHS Markit Flash U.S.
Composite PMI Output Index posted 57.3 in October, rising from 55.0 in
September to signal the fastest uplift in activity for three months and one
that was sharp overall. Stronger growth was driven by the services sector,
which registered the quickest rate of expansion since July. Meanwhile, the
latest rise in factory production was the softest since July 2020 and only
mild, as goods producers continued to be severely hampered by material
shortages and supply chain delays.” Report at...
https://www.markiteconomics.com/Public/Home/PressRelease/291a6f7539534735b69350b6e4e0f921
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 4:30 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.
I noted that almost 15% of the entire US population has
had Covid. Actually, that counts only those who went to a doctor. The actual number is at least twice as high
due to mild cases and those asymptomatic. We can probably safely say that one-third
of the US population has had Covid.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 slipped about 0.1% to 4545.
-VIX rose about 3% to 15.43.
-The yield on the 10-year Treasury slipped to 1.636%.
The Friday run-down of some important indicators remains
well to the bull side (3-bear and 15-bull). 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%.
-Non-crash Sentiment indicator has turned bearish and
that is a bullish signal.
-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.
-Short-term new-high/new-low data is trending higher.
-Long-term new-high/new-lows are rising.
-Slope of the 40-dMA of New-highs is up. This is one of
my favorite trend indicators.
-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.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA
are both above the 20-dEMA.
-The S&P 500 is out-performing the Utilities ETF
(XLU).
-63% of the 15-ETFs that I track have been up over the
last 10-days.
NEUTRAL
-There was a Hindenburg Omen signal 28 September. The McClellan Oscillator turned positive
afterward, so the Omen has been cancelled.
-There have been 2 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.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not quite enough to give a signal.
-The S&P 500 is 8.5% 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.
-Calm-before-the-Storm Indicator – expired.
-The Fosback High-Low Logic Index is neutral.
-There have been 11 up-days over the last 20 days.
Neutral
-There have been 7 up-days over the last 10-days. Neutral
-5.1% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high 21 October. (There is no
bullish signal for this indicator.) This is above the average for all-time
highs and suggests that if we do have a pullback, it is likely to be less than
10%.
-Statistically, the S&P 500 gave a panic-signal 17
Sept. Signal has expired.
-14 October, the 52-week, New-high/new-low ratio improved
by 0.45 standard deviations, somewhat bullish, but neutral.
-Distribution Days.
There had been 7 in the last 25-days. The Index almost had a
Follow-Through-Day 14 Oct – well...let’s just say it was close enough to cancel
the Distribution Days. Since the Follow-thru day was not clear cut, I’ll
include it in the Neutral category.
-VIX is falling, but not enough to send a signal.
BEAR SIGNS
-Overbought/Oversold Index (Advance/Decline Ratio) is
overbought.
-My Money Trend indicator turned down.
-RSI.
-The smoothed advancing volume on the NYSE 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 3 bear-signs and 15 bull-signs. Last week, there were 2 bear-signs and 16
bull-signs.
The daily sum of 20 Indicators slipped from +3 to +1 (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations slipped from +45 to +44 (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 BUY. Volume and Sentiment are bullish; Price and VIX
indicators are neutral.
Nice to finally see a down day to take a little of the
froth out of the market in the short-term. For now, I remain 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 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.
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.
