If today remains a strong bullish day, it would improve confidence that Tuesday was a bottom. Looking back at prior corrections (before QE) there were many times when we got similar improvements in internals (like Tuesday) only to watch the markets go lower. My technique of examining market internals on lower-lows to call a bottom works best on retests. The problem has been that during QE there often haven’t been retests. We need to see the S&P 500 strongly higher today to improve confidence that Tuesday actually was the bottom.
Wednesday, January 26, 2022
Tuesday, January 25, 2022
Consumer Confidence … Coronavirus (Covid-19) … Stock Market Analysis … ETF Trading … Dow 30 Ranking
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
CONSUMER CONFIDENCE (Conference Board vs. prNewswire)
“The Conference Board Consumer Confidence Index® declined in January, after an
increase in December. The Index now stands at 113.8 (1985=100), down from 115.2
in December... ‘Consumer confidence moderated in January, following gains in
the final three months of 2021,’ said Lynn Franco,
Senior Director of Economic Indicators at The Conference Board. ‘The Present
Situation Index improved, suggesting the economy entered the new year on solid
footing. However, expectations about short-term growth prospects weakened,
pointing to a likely moderation in growth during the first quarter of 2022.
Nevertheless, the proportion of consumers planning to purchase homes,
automobiles, and major appliances over the next six months all increased.’"
Press release at...
https://www.prnewswire.com/news-releases/consumer-confidence-fell-in-january-301467668.html
STOCKS WILL PLUNGE ANOTHER 10% (CNBC)
“According to Morgan Stanley's Mike Wilson, the S&P
500 is vulnerable to a 10% plunge despite Monday's late buying binge. He warns
investors are dangerously downplaying a collision between a tightening Federal
Reserve and slowing growth. ‘This type of action is just not comforting. I
don't think anybody is going home feeling like they've got this thing nailed
even if they bought the lows,’ the firm's chief U.S. equity strategist and
chief investment officer told CNBC's ‘Fast Money.’"
Story at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:00 PM ET Tuesday. 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.
If we focus on the box in the above chart we can see
(below) that the 10-dMA of new-cases and the smoothed 10-day has peaked.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell
about 1.2% to 4356.
-VIX rose about 5% to 31.3.
-The yield on the 10-year Treasury rose to 1.776%.
Today’s low on the S&P 500 was 1.2% below yesterday’s
low, while the volume was 11% lower. Market Internals improved handily and the
new-hi/new-low data improved by 6 std-deviations. This is an indication, somewhat
surprisingly, that the Correction is most likely over. This analysis isn’t
always correct. I wish the market had
waited longer before it gave me a buy-signal. The correction is at Day-15 so it
may be a little early, but we could have a retest of the low that would extend
the overall correction time a lot longer.
Most corrections do have a retest, but in recent pullbacks
there haven’t been retests of the lows.
This is a change from past market practice so it’s hard to make a fully
reasoned decision – do we buy now at what appears to be the bottom of the
waterfall or wait for a retest of the low that may not come?
I decided to buy today and increase my stock holdings to
about 45% of the total portfolio. I’ll decide whether to buy more depending on
market action going forward.
Pullback Data
Days since top: 15 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: 9.2%; 12% intraday (Avg.= 13% for
non-crash pullbacks)
The S&P 500 is 1.7% below its 200-dMA.
The daily sum of 20 Indicators improved from -6 to -3
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -56 to -51 (The
trend direction is more important than the actual number for the 10-day value.)
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 remained SELL. Volume & Price are bearish; VIX & Sentiment are
Neutral. The important sell-signal was 12 Jan. Today is just a reminder that
conditions remain bearish.
The VIX indicator is one of
the more reliable signals; it is a good sign that the VIX indicator improved to
HOLD today even though the Long Term NTSM indicator ensemble remained SELL.
I was surprised today by the
buy-signal in my market analysis. At this point, I am a cautious Bull. I’ll be
adding considerably more stocks to the portfolio, if we see more positive
market signs.
The FED will announce tomorrow
at 2PM, but I don’t expect a surprise.
It seems to me that the news is pretty well already out there.
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
Market Internals remained SELL.
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.
Tuesday, I increased my
stock-allocation in the portfolio to about 45% invested in stocks. This is
close to my “normal” fully invested stock-allocation of 50%. I trade about
15-20% of the total portfolio using the momentum-based analysis I provide here.
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.
Monday, January 24, 2022
Markit Composite PMI … Stock Market Correction ... Capitulation ... Coronavirus (Covid-19) … Stock Market Analysis … ETF Trading … Dow 30 Ranking
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“While we take no pleasure in this announcement, the ADP
executive board has decided to formally censure Senator Sinema as a result of
her failure to do whatever it takes to ensure the health of our democracy.” -
Arizona Democrat party chair, Raquel Terán.
Arizona
Democrats censure Kyrsten Sinema for voting rights failure (msn.com)
In 2017, “U.S. Senators Susan Collins (R-ME) and Chris
Coons (D-DE) led a bipartisan group of 61 Senators in writing to Senate
leadership, urging them to preserve the 60-vote threshold for legislation.
"This letter demonstrates that a majority of the Senate, both Republicans
and Democrats, can come together to protect an important tradition of the
Senate that recognizes the rights of the minority and makes bipartisan
legislation more likely,” said Senator Collins...“We have a long way to go
to heal the wounds between our two parties, but this letter is a small first
step towards that important goal." – The letter was Signed by 31 Democrats.
https://mishtalk.com/economics/the-democrats-hypocritical-assault-on-the-filibuster
IHS MARKIT COMPOSITE MANUFACTURING / SERVICES PMI (IHS Markit)
“US private sector firms signaled a marked slowdown in
growth at the start of 2022 amid softer demand conditions, worsening supply
chain disruptions and labor shortages linked to the Omicron wave. Adjusted for
seasonal factors, the IHS Markit Flash US Composite PMI Output Index posted
50.8 in January, down notably from 57.0 in December...The slowdown in output
growth was broad-based, with both manufacturing and service sector firms
reporting near-stalled output as the steep spike in virus cases associated with
the Omicron wave meant ongoing supply issues and labor shortages were
exacerbated by renewed pandemic related containment measures.” Report at...
https://www.markiteconomics.com/Public/Home/PressRelease/c4392f13105a4995984fc407bfac69e9
MARKETS COULD FALL 20% OR MORE (MarketWatch)
“Prominent market technician Ralph Acampora says the
recent bout of market volatility has him uneasy and now he’s forecasting a
deeper drop in a market that has already delivered a significant bruising to
Wall Street in the first few weeks of 2022...’I’ve lived through too many bear
markets,” he said via phone, noting that the lengthy bullish run for stocks,
which has been primarily fueled by easy-money policies from the Federal Reserve
to combat COVID, may be coming to a conclusion.’” Story at...
CAPITULATION (Investopedia)
“By definition, capitulation means to surrender
or give up. In financial circles, this term is used to indicate the point in
time when investors have decided to give up on trying to recapture lost gains
as a result of falling stock prices... if the majority of investors decide to
capitulate and give up on...[a]...stock, then there will be a sharp decline in
its price. When this occurrence is significant across the entire market, it is
known as market capitulation...The problem with capitulation is that it is very
difficult to forecast and identify. There is no magical price at which
capitulation takes place. Often, investors will only agree in hindsight as to
when the market actually capitulated.” Full definition at...
https://www.investopedia.com/terms/c/capitulation.asp
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 5:00 PM ET Monday. 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.
If we focus on the box in the above chart we can see (below) that the 10-dMA of new-cases and the smoothed 10-day may have peaked.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose
about 0.3% to 4410.
-VIX rose about 4% to 29.9.
-The yield on the 10-year Treasury rose to 1.771%.
I noted Friday that we would be watching for a possible
turning Tuesday. Jeepers. Did we have a turning Monday?
Capitulation should occur on accelerating losses into the
close on high volume. Did we see that today? Hardly! The markets collapsed in the morning and then rallied and
actually finished in positive territory. Not only did the markets not exhibit
capitulation, it didn’t even record a lower-low to test the prior low. It is
not likely that today’s action represented an end to this pullback.
Pullback Data
Days since top: 14 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: 8.1% (Avg.= 13% for non-crash pullbacks)
The S&P 500 is 0.5% below its 200-dMA.
The daily sum of 20 Indicators improved from -7 to -6
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from -58 to -56 (The
trend direction is more important than the actual number for the 10-day value.)
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
remained SELL. Volume & VIX are bearish; Price & Sentiment are Neutral.
The important sell-signal was 12 Jan. Today is just a reminder that conditions
remain bearish.
I remain a Bear. Still, I’ll
watch for clues that might indicate that the correction is over. As of now, I expect a bounce to last a couple
of days and then a return to selling. If we get a decent bounce, I am more
likely to be a seller than a buyer.
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 SELL.
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 35% invested in stocks. This is close to my “normal”
fully invested stock-allocation of 50%. I trade about 15-20% of the total
portfolio using the momentum-based analysis I provide here.
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.
Friday, January 21, 2022
Leading Economic Index … Coronavirus (Covid-19) … Stock Market Analysis … ETF Trading … Dow 30 Ranking
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Reporting [by Nina Totenberg of NPR] that Justice
Sotomayor asked Justice Gorsuch to wear a mask surprised us. It is false. While
we may sometimes disagree about the law, we are warm colleagues and friends.”- Chief Justice
Roberts, Justice Sotomayor.
LEADING ECONOMIC INDEX (Conference Board via
PRnewswire.com)
“The Conference Board Leading Economic
Index® (LEI) for the U.S. increased by 0.8 percent in December
to 120.8...’The U.S. LEI ended 2021 on a rising trajectory, suggesting the
economy will continue to expand well into the spring,’ said Ataman
Ozyildirim, Senior Director of Economic Research at The Conference Board. ‘For
the first quarter, headwinds from the Omicron variant, labor shortages, and
inflationary pressures—as well as the Federal Reserve's expected interest rate
hikes—may moderate economic growth. The Conference Board forecasts GDP growth
for Q1 2022 to slow to a relatively healthy 2.2 percent (annualized). Still,
for all of 2022, we forecast the US economy will expand by a robust 3.5
percent—well above the pre-pandemic trend growth.’" Press release at...
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 9:00 PM ET 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.
If we focus on the box in the above chart we can see (below) that the 10-dMA of new cases has not increased over the last couple of days.
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell
about 1.9% to 4398.
-VIX rose about 13% to 28.85.
-The yield on the 10-year Treasury slipped to 1.763%.
There were increased volumes, partly due to Options
Expiration today. Volumes still weren’t high enough to suggest a bottom. That big, flush-out day is still on the horizon.
On CNBC Kelly asked whether Options were causing the downturn. Chris Murphy of Susquehanna
replied, “Although it [options activity] is not the primary driver of the
downturn...We are getting closer to a bottom.”
Pullback Data
Days since top: 13 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: 8.3% (Avg.= 13% for non-crash pullbacks)
The S&P 500 is 0.7% below its 200-dMA.
The Friday run-down of some important indicators turned
more to the Bear side (20-bear and 4-bull), but there are more bull signs, too.
Signs are bearish, but we are probably getting closer to a bottom. 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
-Cyclical Industrials (XLI-ETF) are out-performing the
S&P 500.
-RSI is oversold.
-Bollinger Bands are oversold.
-Overbought/Oversold Index (Advance/Decline Ratio) is
oversold.
NEUTRAL
-There have been 4 Statistically-Significant days (big
moves in price-volume) in the last 15-days. This can be a bull or bear. Now
it’s neutral.
-The S&P 500 is 0.7% below its 200-dMA (Bear
indicator is +12%.). This value was 15.9% above the 200-dMA when the 10%
correction occurred in Sep 2020. (Bigger bottoms are formed when the Index is
at, or below, the 200-dMA.)
-11 January, the 52-week, New-high/new-low ratio improved
by 2.1 standard deviations somewhat bullish, but not enough to send a signal.
-The size of up-moves has been smaller than the size of
down-moves over the last month, but not enough to send a signal.
-Non-crash Sentiment indicator is bullish (95%-bulls on a
5-day basis), but not enough to give a sell signal. (Too bullish is bearish.)
-The S&P 500 Index is OK when compared to the issues
advancing on the NYSE (Breadth).
-The NYSE almost had a 90% down volume day today. That would be bearish, particularly if we
have another 90% down-day in this pullback.
-The Fosback High-Low Logic Index is neutral, but has moved
toward bear territory.
-There have been 7 up-days over the last 20 sessions – This
would be bullish, but this indicator works with Sentiment and sentiment is not
giving a bull signal - Neutral.
-There have been 3 up-days over the last 10 sessions – Leaning
bullish, but still Neutral.
-The Calm-before-the-Storm Indicator.
-There was a Hindenburg Omen signal on 10 January. It has been cancelled because the McClellan
Oscillator turned positive.
BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-My Money Trend indicator is falling.
-The Smart Money (late-day action) is headed down. (This
indicator is based on the Smart Money Indicator developed by Don Hayes).
-The S&P 500 has had 8 Distribution Days in the last
25-days.
-The 10-dMA % of issues advancing on the NYSE
(Breadth) is below 50%.
-The 50-dMA % of issues advancing on the NYSE (Breadth)
is below 50%.
-The 100-dMA % of issues advancing on the NYSE
(Breadth) is below 50%
-The 50-dMA % of issues advancing on the NYSE (Breadth)
has been below 50% for 27 consecutive days. (3 days in a row is my bear signal)
-McClellan Oscillator.
-MACD of the percentage of issues advancing on the NYSE
(breadth) made a bearish crossover 5 January.
-Buying Pressure minus selling pressure is trending sharply down.
-MACD of S&P 500 price made a bearish crossover, 6
January. Strong bearish signal now.
-Short-term new-high/new-low data is falling.
-Long-term new-high/new-low data is falling.
-Slope of the 40-dMA of New-highs is down. This is one of
my favorite trend indicators.
-2.8% of all issues traded on the NYSE made new, 52-week
highs when the S&P 500 made a new all-time-high, 3 January. (There is no
bullish signal for this indicator.) This indicates that the advance is too
narrow and a correction from the top is likely to be >10%.
-VIX.
-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 under-performing the Utilities
ETF (XLU) over the last 40 sessions.
-Only 36% of the 15-ETFs that I track have been up over
the last 10-days.
On Friday, 21 February, 2 days after the top before the
Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there
are 20 bear-signs and 4 bull-signs. Last week, there were 15 bear-signs and
2 bull-signs.
The short-term daily indicators improved:
The daily sum of 20 Indicators improved from -8 to -7 today
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations improved from -59 to -58 (The trend
direction is more important than the actual number for the 10-day value.) 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 remained SELL. Volume & VIX are bearish; Price & Sentiment are
Neutral. The important sell-signal was 12 Jan. Today is just a reminder that
conditions remain bearish.
Volumes were high and internals were worse. Friday was not the bottom.
I remember that years ago, Jeffrey Saut had a comment that
may be appropriate to repeat now. He said, “...we could be in one of these
“selling stampedes” that tend to last 17 – 25 sessions, with only 1-and-a-half
to three-day pauses/throwback rallies, before they exhaust themselves on the
downside...I also said that it was too soon to tell yet if this is such a
stampede, but “Never on a Friday.” The reference was that once the markets get
into one of these weekly downside skeins, they rarely bottom on a Friday. Nope,
they typically give participants over the weekend to brood about their losses
and then they show up the next Monday in ‘sell mode’ leading to Turning
Tuesday.” We’ll be watching for a possible turning Tuesday.
I remain a Bear until proven
otherwise.
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 SELL.
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 35% invested in stocks. This is close to my “normal”
fully invested stock-allocation of 50%. I trade about 15-20% of the total
portfolio using the momentum-based analysis I provide here.
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.
Thursday, January 20, 2022
Jobless Claims ... Philadelphia Fed Index … EIA Crude Inventories ... Stock Market Could Drop Another 10% ... Buy Signal? ... Coronavirus (Covid-19) … Stock Market Analysis … ETF Trading … Dow 30 Ranking
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
"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.
My cmt: Got to have that Build Back Better!
"Russia will be held accountable if it invades - and
it depends on what it does. It's one thing if it's a minor incursion and we end
up having to fight about what to do and what to not do, et cetera..." –
President Joe Biden.
My cmt: Just another example that Biden is failing
mentally. He gave Russia permission to conduct a minor incursion? Per Mathew
Chance on CNN: Ukrainian officials said they were “shocked that President Biden
would give a green light to Vladimir Putin.” The Biden administration spent
today walking back Biden’s comments.
JOBLESS CLAIMS (YahooFinance)
“Weekly new jobless claims unexpectedly jumped last week
by the most since October, with some renewed virus-related disruptions at least
temporarily impeding the labor market's recovery...Initial jobless claims, week ended Jan.
15: 286,000 vs.
225,000 expected...” Story at...
https://finance.yahoo.com/news/weekly-unemployment-claims-week-ended-jan-15-2022-200147927.html
PHILADELPHIA FED INDEX (Morningstar)
“Factory activity in the Philadelphia area picked up pace
in January compared with the previous month as demand for goods strengthened,
according to a survey from the Federal Reserve Bank of Philadelphia released
Thursday. The index for current general activity of the Business Outlook Survey
rose to 23.2 in January from 15.4 in December...” Story at...
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 0.5 million barrels from the
previous week. At 413.8 million barrels, U.S. crude oil inventories are about
8% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
STOCK MARKET COULD DROP ANOTHER 10% (YahooFinance)
"While the average stock has seen quite a bit of
downside, the major averages still have a good 10% down from here," said
Wilson [Morgan Stanley's chief markets strategist Mike Wilson] on Yahoo Finance
Live.
https://finance.yahoo.com/news/stock-market-could-drop-another-10-soon-top-strategist-174400074.html
100-dMA BUY SIGNAL (ZeroHedge)
“Since June 2020, the benchmark has closed below its
100-day average eight times, data compiled by Bloomberg show. Three of those
instances, it never traded lower after that, even intraday, and three times
there was never a lower close after. One of the occurrences there was one lower
close -- by 0.03% -- before it headed higher, and the worst time was one close
0.16% lower before it recovered, the data show.” Commentary at...
https://www.zerohedge.com/markets/technical-sell-signal-100-hit-rate-dip-buyers-triggered
My cmt: Sure didn’t look like it today!
CORONAVIRUS (NTSM)
Here’s the latest from the COVID19 Johns Hopkins website as
of 9:00 PM ET Thursday. 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.
If we focus on the box in the above chart we can see (below) that new cases fell today.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.1% to 4483.
-VIX rose about 7% to 25.59.
-The yield on the 10-year Treasury slipped to 1.782%.
Pullback Data
Days since top: 12 (Avg= 30 days for corrections <10%;
60 days for larger, non-crash pullbacks)
Drop from Top: 6.5% (Avg.= 13% for non-crash pullbacks)
The S&P 500 is 1.2% above its 200-dMA.
At today’s close, we saw Bollinger bands, RSI and the
Overbought/Oversold Index all bullishly “oversold.” However, earlier in the day,
the markets were up nearly 2%; I was tempted to buy some stocks. Utilities were outpacing the S&P 500 and
that was odd. I waited to see what would happen later in the day, but what happened was not good. It was an ugly,
bearish close...
Volume was higher than the prior low, but not drastically so. As expected, selling pressure continues to outpace buying pressure. Internals remain poor so no bottom yet.
The daily sum of 20 Indicators remained -8 today (a
positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations declined from -53 to -59 (The trend
direction is more important than the actual number for the 10-day value.) 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 remained SELL. Volume & VIX are bearish; Price & Sentiment are
Neutral. The important sell-signal was 12 Jan. Today is just a reminder that
conditions remain bearish.
The S&P 500 closed about 2% its 100-dMA today, a
continuing worrisome sign for the bulls. The Index is now closer to its 200-dMA
than its 100-dMA.
Corrections usually bottom after the Index heads straight
down in a waterfall pattern. The S&P 500 may be in one now, but if it is, there
is no telling how far it could go. We can
guess it might end at the 200-dMA. That
is now only 1.2% lower than Thursday’s close. Bottoms often occur on huge,
panic selling, but we haven’t seen that yet. After the bottom, it is normal for
a bounce to be followed by a retest of the low. That pattern is more likely if
the correction gets a little deeper. We’ll see...
Today there was high, unchanged-volume. Many believe that
this indicator suggests investor confusion at market turning points. Recent
history shows this indicator has indicated a reversal of some kind, either now,
or near future. My problem is that it is frequently a false signal. At this
point if that indicator is sending a decent signal, the direction of reversal
would be up. I’m not convinced; we still don’t have clear signs that the market
weakness is over. As always, it could be, but the evidence isn’t clear yet.
I remain a Bear until proven
otherwise.
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
THURSDAY MARKET INTERNALS
(NYSE DATA)
Market Internals remained SELL.
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 35% invested in stocks. This is close to my “normal”
fully invested stock-allocation of 50%. I trade about 15-20% of the total
portfolio using the momentum-based analysis I provide here.
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.
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